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2014/18

BUSINESS PLAN
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Contents
Chapter 1 Foreword 1
Chapter 2 Introduction 3
Chapter 3 Policy Statement 5
Chapter 4 Self Appraisal of Business
Achievements and Strategic Plan 6
Chapter 5 Directives by Minister 27
Chapter 6  Participation in Companies, Trusts,
Joint Ventures and Transactions 28
Chapter 7 Water Resource Development 29
Chapter 8 Bulk Potable Water Plan 44
Chapter 9 Bulk Waste Water Treatment and
Disposals 61
Chapter 10 Retail and Industrial Water Supply 63
Chapter 11 Other Activities 64
Chapter 12 Human Resource Development Plan 75
Chapter 13 Environmental Management
Programme and Plans 86
Chapter 14 Water Conservation and Water
Demand Management 90
Chapter 15 Financial Plan 93
Chapter 16 Bank Account Details 103
Chapter 17 Analysis of Risks 104
Chapter 18 Declaration of Disclosure 107
Chapter 19 Shareholders Compact 108

Annexures

Annexure A Service Area Map 120


Annexure B Scheme Layout Plan 121
Annexure C Key Statistics 122
Annexure D Strategic Plan and Corporate Scorecard 126
Annexure E Ma jor Dam Yields 145
Annexure F High Level Organogram 146
Annexure G Financial Model 147
Annexure H 5 Year Capex Programme 165
Annexure I Bank Account Details 167
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Chapter 1

Foreword by the Chief Executive


Amatola Water is in year two of its new long term strategic plan with a 20-year timeframe as aligned
to the country’s National Development Plan. Central to this strategy is the refocus of Amatola Water’s
core mandate to Section 29 activities. Good progress has been made in implementing the strategy, with
55.3% primary business in 2012/13 compared to 41% primary of 2011/12. Further progress is underway
in the current financial year and so far Amatola Water is on target to achieve its five-year goal of 70%
primary and the 20 year goal of 90% primary business.

Amatola Water is expanding its role to water service delivery and contribution to community livelihoods
and sustainability in its gazetted area by upgrading six of its plants and related bulk infrastructure in
these regions. These upgrades are underway and will be completed over the next two years, resulting in
increased production capacity from 112 mega litres to 154.4 mega litres. This is a key catalytic project in
terms of the refocus on the Section 29 mandate.

Amatola Water supports the Department’s Institutional Reform and Realignment (IRR) initiative and the
ability of this initiative to truly change the bulk water, bulk sanitation and water resource infrastructure
management in the Eastern Cape Province in a way that will transform water services delivery. The
Board comprehensively performed and submitted to the Minister of Water and Environmental Affairs a
Due Diligence report on the Southern Water Utility as per the directive from the Minister.

Collaborating with DWA on numerous initiatives within the Province has impacted positively on services
on the ground. The significant progress on the King Sabata Dalindyebo Presidential Intervention (KSD
PI) combined with the master planning for the OR Tambo District Municipality (ORTDM) is a good
example of this. As part of its contribution to a decent standard of living for all South Africans, Amatola
Water continues to advocate the design standard of approximately 750ℓ per household per day on all
infrastructure projects to align with the intent of the National Development Plan.

The Ntabelanga Dam and related infrastructure on the Mzimvubu system will have a significant positive
impact on the eastern region of the Province. Most relevant to Amatola Water is the opportunity to
supply quality potable water to three district municipalities, namely the OR Tambo, Joe Gqabi and
Alfred Nzo district municipalities in the region of a 98% assurance of supply. In a significant step to
redress previous inequalities, this project will allow the communities in these areas access to services at
a consistent high standard for generations to come.

In addition to delivering on its core mandate Amatola Water understands it must do so in a responsible
manner and thus continues to improve its governance with progress made to achieve unqualified audit
opinions and a surplus of R 25 million in the latest audited financial results.

Amatola Water presents the 2014/18 business plan to the Department for consideration and invites it to
enter into a social compact to accelerate the transformation of the Eastern Cape Province bulk water
service provision function.

M. Msiwa
Acting Chief Executive
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Amatola Water is on
target to achieve its
5 year goal of 70%
Primary and 20 year
goal of 90% Primary
Business
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Chapter 2

Introduction
Establishment

Amatola Water is a national government business enterprise (water board) operating in the water sector.
As an essential service utility, it is mandated by the Water Services Act (Act 108 of 1997) to offer services in
bulk water supply (both potable and untreated water), waste water treatment and other related services,
to the public benefit.

The organisation was established by the Minister of Water and Environmental Affairs as a water board in
terms of section 108 (2) of Water Act, 1956 (Act No. 54 of 1956), by the notice in the Government Gazette,
on 14 November 1997 which was superseded by the Water Services, Act 108 of 1997. In terms of this and
ensuing legislative provisions, Amatola Water operates as a Schedule 3(b) national government business
enterprise, as recognised under the provisions of the Public Finance Management Act (PFMA).

Amatola Water commenced formal trading in April 1998, with a directive from the Department of Water
Affairs (DWA) to provide improved and extended water services to enhance the quality of life and socio-
economic potential of the people of the Eastern Cape Province.

In July 1998, operational control of various water services facilities that had previously been operated by
Eastern Cape homeland governments and by departments of central Government together with attendant
personnel was vested with Amatola Water in terms of a Transfer Agreement concluded between the water
board and the State.

Vision, Mission and Organisational Values

Amatola Waters vision, mission and values are reviewed annually to ensure alignment to its mandate
and shareholders strategic intent.

Vision
“To lead sustainable bulk water services in the Eastern Cape”.

Mission
“Amatola Water strives to contribute to the public health and community livelihoods by providing bulk
potable water, bulk sanitation to Water Service Authorities and managing water resource management
infrastructure”
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Values
“We are inspired by an unwavering commitment to empower our stakeholders through the consistent
demonstration of:

Responsibility
Excellence
Integrity
Accountability”

Amatola Water recognises the importance of living out core values in the implementation of its mission
to ensure the realization of its vision. Basing every decision and action on these values is deemed vital to
Amatola Water’s overall success, growth and financial strength, now and into the future.

Service Area

Amatola Water’s gazetted service area includes most the Amathole and Chris Hani District Municipalities,
the Ndlambe Municipality and smaller portions of the Cacadu and Joe Gqabi District Municipalities.
Amatola Water’s gazetted area incorporates 47 515km²of the Eastern Cape Province. Annexure A contains
a map detailing Amatola Water’s current service area. Annexure B contains a map detailing the scheme
polygons of bulk infrastructure operated by the organisation. Annexure C provides key statistic for the
region where Amatola Water operates.
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Chapter 3

Policy Statement
Amatola Water developed its Policy Statement as a separate document in accordance with the
requirements of the Department of Water Affairs (DWA). The approach of separating the Business
Plan and the Policy Statement into two documents and submitting both simultaneously for appraisal is
continued by Amatola Water for the 2014 / 2015 year.
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Chapter 4

Strategy and Self Appraisel of Business


Achievements
Strategy

Strategic Direction
Amatola Water developed a new 20 year strategic direction for the organisation in the previous year. As an
entity of the state, the new direction is based on what Amatola Water believes to be its role and purpose
of formation i.e. assisting the state to achieve its objectives. In this process of alignment Amatola Water
has adopted a 20 year timescale for its long term strategic goals, as the state has done in documents
such as the National Development Plan. These 20 year strategic goals give Amatola Water its long term
direction within which the next 5 year strategic goals and objectives are set. Detailed planning is then
done for the 5 year window within the direction of these 20 year strategic goals.

As a unique post democracy rural water board Amatola Water believes this new strategic direction
will allow it to perform the function it was created for in a manner that successfully contributes to
government providing the quality of life of the citizens within the Eastern Cape.

Section 4b of the Constitution states that Local Government, in respect to water and sanitation, is responsible
for: “Water and sanitation services limited to potable water supply systems and domestic waste-water and sewage
disposal system.” With local government mandated for the distribution of potable water, the abstraction of
raw water and production of potable water is the mandate of the Water Board. Institutional Reform and
Realignment and the thinking around a Provincial Water Enity has further emphasis this thinking.

As such Amatola Water’s strategic direction is that of the provision of potable water and sanitation
services through bulk infrastructure. In the past Amatola Water has been drawn into assisting water
service authorities with water services delivery in many different areas and activities which has resulted
in a 50/50 split between its Primary and Secondary businesses (sec 29 and sec 30 activities as per the
water service act). Strategically focusing, on the reason for its formation as state entity, Amatola Water
20 year strategic goal is to have a 90/10 split between these activities. With 90% of its business being
that of bulk water and sanitation activities including water resource infrastructure management and
10% provided advisory and related services to Water Service Authorities. This focus on products and
services to be provided is closely aligned to Amatola Water understanding of the Regional Water Utility
functions through the Institutional Reform and Realignment process.

As part of Amatola Water contribution to a decent standard of living for all South African citizen, as described
in the National Development Plan, Amatola Water has adopted a design standard of approximately 750ℓ per
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household per day on all infrastructure projects. Amatola Water believes considering the 20 year planning
cycle and the National Development Plan we need to start now in achieving the desired standard for all
South Africans.

In pursuit of its mandate and strategic direction, the water board has adopted the following as its
Corporate Vision and Mission:

Vision
“To lead sustainable bulk water services in the Eastern Cape”.

Mission
“Amatola Water strives to contribute to the public health and community livelihoods by providing bulk
potable water, bulk sanitation to Water Service Authorities and managing water resource management
infrastructure”

Values
Amatola Water values continue as: “We are inspired by an unwavering commitment to empower our
stakeholders through the consistent demonstration of:

Responsibility
Excellence
Integrity
Accountability”

Strategy Framework

Amatola Water has adopted the Balanced Scorecard approach with the four quadrants as set out by
Kaplan and Norton and the standard four quadrants are used:

1. Financial Quadrant
2. Stakeholder and Customer Quadrant
3. Internal Processes Quadrant
4. Learning and Growing Quadrant

As part of giving appropriate structure to its strategy measures and performance monitoring and management
system Amatola Water has also adopted the Ten Areas for Successful Water Utility Service Provision.
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Effective and Holistic WSP Function

Employee Water
Product Customer Community
Leadership/ Resources
Quality Satisfaction Sustainability
Development Adequacy

Financial Infrastructure Operational Operational Stakeholder


Viability Stability Resiliency Optimisation Support

These ten fit within the four balanced scorecard quadrants and help ensure Amatola Water focuses on
all the relevant areas to be a successful water utility. The ten are as follows:

1. Water and Wastewater Quality: is achieved when Amatola Water produces bulk potable water and
wastewater in compliance with statutory requirements and consistent with customer needs at both
AW owned and ROU plants.

2. Customer Satisfaction: is the degree to which Amatola Water provides reliable, responsive, and
affordable products and services to WSA customers which meet or surpass customer expectations.
Timely feedback to customer-agreed service levels to maintain responsiveness to customers needs
and to delight these customers.

3. Stakeholder Relationships and Support: As an organ of state Amatola Water has a variety of different
stakeholders, most notable the Department of Water Affairs. This outcome includes managing and
building relationships with the various stakeholder groups by aligning initiatives to support key
stakeholder programs and informed by the inter-governmental framework, as well as influencing
these stakeholders to have common understanding of Amatola Water role and catalytic initiatives
within the sector.

4. Infrastructure Stability: is achieved when Amatola Water’s infrastructure is consistent with customer
service levels, and consistent with anticipated growth and system reliability goals.

5. Financial Viability: is achieved when Amatola Water manages operating expenditures and increasing
revenues in a manner that strengthens the balance sheet in a sustainable manner. In addition, the
organisation aims at a sustainable tariff that is consistent with customer expectations, recovers
costs and provides for future expansion.
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6. Water Resource Adequacy: is achieved when Amatola Water assesses the scarcity of freshwater
resources, investigates sustainable alternatives, manages water abstractions assiduously and has
access to stable raw water resources to meet current and future customer needs.

7. Community / Environmental Sustainability: is achieved when Amatola Water is explicitly cognisant


of and attentive to the impacts it has on current and future community sustainability, supports socio
economic development and manages its operations, infrastructure, and investments to protect, restore
and enhance the natural environment, whilst using energy and other natural resources efficiently.

8. Leadership and Employee Development: is achieved when Amatola Water is dedicated to continual
learning and improvement, recruits and retains a workforce that is competent, motivated, adaptive
and works safely, ensures institutional knowledge is retained and improved; provides opportunities
for professional and leadership development, and is led by an integrated senior leadership team.

9. Operational Resiliency: is achieved when Amatola Water’s proactively and effectively manages
business risks across all areas of the business in a manner that ensures sustainability of the
organisations even in times of challenges and difficulties.

10. Operational Optimization: is achieved when Amatola Water has on-going, timely, cost-effective,
reliable, and sustainable performance improvements in all facets of its operations, has a culture of
accountability and every employee and department striving to improve systems and processes.

Strategic Goals and Objectives

Amatola Water has refined its 20 year goals and has developed 5 year Strategic Objectives that if it
acheives will successfully implemented the new strategy. Measures and targets for each of the next 5
years have been set and are included in Annexure D.

20 Year Goals
Category Goal
Blue and green drop certification for all bulk works - (owned
Product quality (primary) and rou)
Providing accredited laboratory water services for the entire
Product quality (primary) province

Primary product quantity Increase volumes to 350 mega litres per day
80% of wsa’s in the province as contracted customers
Customer satisfaction through ownership or rou

Employee / leadership development Enhanced strategic effectiveness

Employee / leadership development Build cross-functional excellence/ effectiveness


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20 Year Goals
Category Goal

Employee / leadership development Develop operational competence (individual)

Employee / leadership development Renowned knowledge hub for water services sector in ec
98% assurance of supply at a minimum service level of 750ℓ
Water resource adequacy per household per day

Contribute to decent living standards and enhance public


health within communities in ec through quality adequate
Community sustainability water services
Improve solvency, liquidity and profitability to achieve an
Financial viability investment grade Fitch Rating
80 % of the infrastructure master plan implemented
Infrastructure stability (investment / needed resources)
98% availability of water supply and 90% reliability of
Infrastructure stability sanitation services
Bulk water utility with interconnected regional schemes in
Operational resiliency the eastern cape
Fully implemented businesses continuity system (ims,
Operational resiliency quality systems, knowledge management)

Operational optimisation Continuous improvement philosophy institutionalized


Continuous alignment of people, skills, systems, policies and
Operational optimisation procedures for strategy implementation

Stakeholder support To be the center of a fully-fledged provincial water utility (irr)


Strong and well established relationships with stakeholders –
Stakeholder support internal and external

Balanced Scorecard
Quadrant WSU Area (10 Outcomes) 5 Year Objective(s)
SC: Stakeholder CS: Customer 2 additional Bulk water supply contracts with WSA (3
and Customer Satisfaction currently) (ROU)
Increase volumes to 160 mega litres per day

Improved customer satisfaction 7.5/10 average score

Acquire contracts for Water Resource Infrastructure


Management

Acquire contracts for Waste water works


WQ: Water and Waste Achieve Statuary Quality compliance at All AW Owned
Water Quality and ROU plants efficiently
Blue drop advisory services
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Balanced Scorecard
Quadrant WSU Area (10 Outcomes) 5 Year Objective(s)
SC: Stakeholder CE: Community Contribute to decent living standards and enhance
and Customer / Environmental public health within communities in ADM through
Sustainability quality adequate water services
Provide services and invest in technologies / systems
in an environmentally responsible and sustainable
manner
SS: Stakeholder Strengthen and deepen relationships with statuary,
Relationships & contracted and non statutory stakeholders
Support
Be centre of new provincial regional bulk utility
F: Financial FV: Financial Viability On-going strengthening of Balance Sheet to
Perspective sustainable services (Ratios)
Surplus per financial year contribution to build
reserves for infrastructure investment
Explore sourcing of funding alternatives for growth of
new infrastructure (excluding replacement)
P: Internal Processes WA: Water Resource 98% Assurance of supply in ADM, Ndlambe and ORTDM
Adequacy Region (Sandile and Mzintlava Dams)
IS: Infrastructure 90% Availability of water supply for all bulk services
Stability
AW Plant Upgrade and KSD PI Projects

Develop and EC water master plan to direct future


funding streams
Minimise production and distribution water losses
OR: Operational Interconnected supply to Amahlathi, Ngqushwa,
Resiliency Nkonkobe, Ndlambe
Business continuity system implemented

Fully implemented IMS system

Accredited laboratory providing services across the


entire Eastern Cape
OO: Operational Aligning People, Skills, Systems, Policies and
Optimisation Procedures for Strategy Implementation
Fully functional governance, compliance, risk and
fraud prevention systems for clean audit
Continuous improvement system
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Balanced Scorecard
Quadrant WSU Area (10 Outcomes) 5 Year Objective(s)
LG: Learning and ED: Leadership
Enhanced Strategic Effectiveness
Growing & Employee
Development Build Cross-Functional Excellence/ Effectiveness

Develop Operational Competence (individual)

Entrenching the appropriate corporate culture:


Decisive Leadership; resolving Organisational Politics;
and Issues of Conflict
To be a renowned knowledge hub for the water
services sector in the Eastern Cape

Strategy Implementation and Catalytic Initiatives

With Amatola Water 20 year strategy in place and refinement occurring each year, full attention can
be given to the implementation of strategy. Three additional interventions have being developed in the
institution in order to facilitate this further:

1. Catalytic Initiatives
2. Divisional Performance Reviews
3. Board Committee Strategy Implementation Monitoring and Evaluation

The following are the list of key Catalytic Initiatives which will drive the successful implementation of the
strategy and success of Amatola Water:

1. Institutional Realignment and Reform.


2. AW Plant Upgrade and KSD PI Projects.
3. Aligning People, Skills, Systems, Policies and Procedures for Strategy Implementation.
4. Entrenching the appropriate corporate culture: Decisive Leadership; resolving Organisational Politics;
and Issues of Conflict.
5. Fully functional governance, compliance, risk and fraud prevention systems for clean audit.

As part of improving its internal Strategy Monitoring and Evaluation Amatola Water has implemented
a quarterly internal peer review of divisional effectiveness at implementing strategy. Divisions present
their quarterly performance and are rated in five areas by other divisions and the CEO. These areas
include evidence of performance and cascading the strategy to lower levels of staff.

As part of its oversight role and responsibility for Strategy, the Board has allocated to its committees the
oversight of the strategy implementation of the 10 areas for successful Water Utilities as follows:
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Area Board Committee Director Responsible

Financial Viability FINCO CFO

Stakeholder Support Corporate Citizenship CEO

Employee / Leadership Development HRC D: CS

Customer Satisfaction Strategy & BD CEO

Product Quality Strategy & BD D: Ops

Infrastructure Stability FINCO D: P&D

Operational Resiliency Strategy & BD D: Ops

Operational Optimisation Strategy & BD D: CS

Community Sustainability Corporate Citizenship D: CS

Water Resource Adequacy Strategy & BD D: P&D

Self Appraisal of Business Achievements


Self-appraisal of Amatola Water business achievements covers the time period from July 2013 to
December 2013. Self-appraisal of the previous financial year is covered in the previous year business
plan and the annual report for 2011/2012. This self-appraisal is done comparing to the corporate balance
scorecard as submitted to DWA in the previous business plan. The performance is indicated for quarter
1 and quarter 2 separately and are as per the quarterly reporting approved by the Board.

In the area of its Primary mandate the Board has performed well, with increased volume sales and a
high quality of water provided and more than 98% assurance of supply. A main focus of the Board has
been improving and sustaining its financially viability due to previous years challenges. The Board has
performed well in this area and for the first six months of the year made a surplus of R21 million.

Highlights for the Year to Date:

• Increase in the volume sold and quality of bulk potable water above the targets
• Surplus of R 20 million and significantly improved liquidity
• Percentage compliance with environmental management plans across AW

Challenging areas for the Year so far:

• Debtors days improving but still 127 against target of 70 days and baseline of 113 days
• Labour cost still high at 40% of total cost compared to the target of 38%
• Capex spend significantly behind schedule
• Various areas were the setting up of the new measurement systems is not complete making it difficult
to ascertain progress of strategy implementation in these areas.
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Finance is busy with various interventions to improve the Debtors days. Staff costs are being reviewed
with the understanding that the current total compliment is higher than the desired levels. Capex spend
is being prioritised.

63% of scorecard targets have been met for the first six months, compared to 68% achievement in the
previous quarter indicating a great gap between planned strategy implementation and the current reality
within Amatola Water. Should this trend continue, this would become a ma jor concern for Amatola Water.

Achievement of Targets

0%

25%

11% 63%

Achieved

Partially Achieved

Not Achieved

Information Outstanding
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment
STAKEHOLDER & CUSTOMER PERSPECTIVE
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Increased
customer base Number of
and penetration bulk potable
(delivery options/ water supply BCMM, ADM &
CS CS1 services) CS1.1 agreements 3 3 3 3 3 Ndlambe in place

Number of ROU AW singed a ROU


agreements in with Makana LM in
CS1.2 place 0 1 1 1 1 October 2013

Volume of This is normal during


Water Sold by the peak summer
owned and ROU months and will drop
CS1.3 plants 85 mℓ/day 87 90.5 87 92.38 towards winter time.

Average
Improved Customer
customer satisfaction
CS CS2 satisfaction CS2.1 score n/a 6 - - -

% Compliance
to customer kpa Systems to manage
as per customer this still being
CS2.2 charter n/a 70% 0 70% 0 implemented

Newly appointed
plant superintendents
% Compliance and changing of
Achieve SANS at SANS Class 1 chemical suppliers
All AW Owned potable water were the cause
& ROU plants (Owned and for the drop in the
WQ WQ1 efficiently WQ1.1 ROU) 99% 98% 99.1% 98% 97.9% compliance target

% Compliance
with effluent
license
standards
(Owned and No agreement in
WQ1.2 Rou) n/a 60% N/A 60% N/A place or owned plants
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment

Number AW
Schemes with
capacity to
Contribute to supply 750ℓ
decent standard per household
of living and in per day at
support of rural terminal Nahoon & Laing
CE CE1 livelihoods CE1.1 reservoir 2 2 2 2 2 schemes

Provide services
and invest in % Compliance
technologies / with
systems in an environmental
environmentally management
responsible plans across
and sustainable AW (owned and 8 of 10 works
CE CE2 manner CE2.1 ROU) n/a 50% 30% 5% 80% compliant

Survey was done by


UP and the report
No of said that payback
alternative period is not viable
energy should reconsider
technologies after upgrades at
CE2.2 introduced 1 1 0 0 0 Sandile.
No of
Permanent
jobs created in
CE2.3 programs 0 30 14 7 20
No. of
Temporary
Jobs Created
CE2.4 (indirect) n/a 90 660 25 684
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Ob Measure / Y1

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WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment
Strengthen
and deepen % Compliance
relationships with Executive
with statuary, Authority
contracted and mandates DWA quarterly
non statutory (MTEF, NDP and reported submitted
SS SS.1 stakeholders SS1.1 DWA Strategy) 100% 100% 100% 100% late

% Compliance
with contractual
commitments Systems still being
SS1.2 (excl customers) 95% 95% 0 95% 0 set up
No of
consultative
meetings with
key interest Still on target for the
SS1.3 groups n/a 4 2 1 0 year
FINANCIAL PERSPECTIVE
The current ratio is
adverse at the end of
On-going quarter 2, the debtors
strengthening of have significantly
Balance Sheet decreased compared
to sustainable to debtors at year
FV FV1 services (Ratios) FV1.1 Liquidity Ratios: 0.87 1.25 1.09 1.25 1.21 end by almost 59%.
The debtors’ days
are adverse as the
balance of trade
debtors include
both primary and
secondary debtors
FV1.2 Debtors Days 113 70 132 70 127 where
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment
Revenue has not
grown sufficiently
to the level of
complementing the
number of employees
in the organisation.
Section 30 revenue is
relatively lower than
Employee to budget while there is a
revenue (R slight movement in the
FV1.3 Million) R0.9 R 1 mil 200 K 250 K 420 K number of employees.

Solvency ratio is
FV1.4 Solvency ratio 0.87 1.25 2.13 1.25 2.45 favorable.
Return on assets is
favorable due to
higher than expected
Return on assets profit return for the
FV1.5 % 0.02% 0.1% 1.11% 0.1% 3.99% quarter.
Increases in the
volumes sold for
potable and raw
water has contributed
Net profit positively to the
FV1.6 margin % (All) - 3% 7% 3% 13% surplus.
Increases in the
volumes sold for
potable and raw
water has contributed
Gross profit positively to the
FV1.7 margin % (All) 22% 25% 28% 25% 34% gross profit.
Expenditure on direct
input costs has increase
Total to accommodate the
expenditure demand for potable
FV1.8 R in 000 R550 R80 R138 R159 water.
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Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment
The target has
been achieved
in the second
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quarter however
there is needs for
improvement on
BBBEE spend on
Qualifying Small
Enterprises and
Emerging Micro
Enterprises in the
FV1.9 BBBEE spend - 100% 100% 100% 100% coming quarters
Electricity usage is
relatively high during
the peak demand
season (winter).
There's a downward
trend from October
to December 2013 as
we move in swiftly
Electricity Cost in the low demand
FV1.10 (R/KL) 0.56 0.60 0.78 0.60 0.73 season.

Actual chemical
expenditure and
usage has increased
in the second
Chemical Cost quarter due to water
FV1.11 (R/KL) 0.34 0.36 0.20 0.36 0.26 turbidity.

Increases in the
Surplus per volumes sold for
financial year potable and raw
contribution to water has contributed
build reserves Revenue in positively to the
for infrastructure Rands (in million revenue generated in
FV FV2 investment FV2.1 rands) R423 R352 R84 R140 R167 the second quarter
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment
Higher than expected
surplus due to higher
sales of potable
water and monthly
Surplus in Rands recognition of project
FV2.2 (in Million) 0 R10 R6 2.5m R21 revenues.

Amount of
targeted surplus
placed in Management targets
reserve fund (in to put into reserves
FV2.3 million Rand) 0 R6 R3.6 1.5 R13 60% of the surplus.
Section 30 revenue
has been generally
lower than budgeted
due to loss of revenue
% Revenue from the termination
Secondary of Joe Gqabi contract
Business / Total and other secondary
FV2.4 Revenue 55% 45% 33% 55% 34% business activities.
The labour costs to
total cost ratio is
adverse. This ratio
is going to improve
as some of the
employees will be
transferred to ADM
% Labour costs in third and fourth
FV2.5 of total costs 41% 38% 41% 38% 40% quarter.
Explore sourcing
of funding
alternatives for
infrastructure Amount of Grant Not scheduled in first
FV FV3 development FV3.1 funding secured R0 R0 N/A R0 0 year

Amount of
Lending (capital
market) funding Not scheduled in first
20

FV3.2 secured 0 R0 N/A 0 0 year


Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment
Amount of
Development
Agency funding Not scheduled in first
21
FV3.3 secured 0 R0 N/A 0 0 year
Tariff negotiations
% average and consultation
increase of is progress. The
tariff (within final average tariff
government increase will be made
Sustainable & targeted available in the third
FV FV4 Affordable Tariff FV4.1 inflation) 10% 8% 9.3% 8% 9.3% quarter.
INTERNAL PROCESSES QUADRANT

Adequate water
security and % assurance
assurance in level (1 in 50 No over abstraction
support of water year drought / from any resource at
WA WA1 supply WA1.1 restriction) 98% 98% 98% 98% 98% present supply levels
The target has
not been achieved
however there
is great need to
increase revenue
generated from
% Infrastructure operations in order to
Reliable CAPEX vs. start with top priority
IS IS1 infrastructure IS1.1 Revenue 0% 4% 1% 1% 0% CAPEX projects.

Overall
capex project
completion Progress is being
dates within made with planning
targets as a and feasibilities on
IS1.2 percentage 0% 75% 0% 0% 21% capex projects
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment
Increased
access to
services
measured by Performance against
Rand spend on this measure is
IS1.3 Capex Projects R0 R26 Mil R56K R5Mil R4,2 Mil improving
The target has been
achieved however
there is great need
to increase revenue
generated from
operations in order
% Infrastructure to carry out planned
Maintenance of and preventative
IS IS1.4 Revenue 8% 6% 9% 2.5% 9% maintenance.
% alignment of
Influence water supply
Provincial Water schemes to Adequate resources
Infrastructure adequate water at current demand
IS IS2 Sector Planning IS2.1 resources n/a 95% 95.9% 95% 100% levels
Minimise Water losses came
produced and down and the target
distributed water was achieved, but still
to efficiently % total water need some attention
reduce water loss AW Owned in the Debe, Peddie
IS IS3 losses IS3.1 and ROU 15% 12% 11.2% 13% 12% and Laing areas
Upgrade plants No. of plants
to provide commissioned
minimum 5 megs at 5 megs per Nahoon, Sandile,
IS IS4 per day IS4.1 day 4 4 4 4 4 Laing & Peddie
Ensure
uninterrupted
water supply, No. unplanned
with adequate interruptions 99.53% of Assurance
pressure to to supply >24 of Supply was
OR OR1 customers OR1.1 hours 2 0 0 1.47% achieved in Q2
22
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment
Adequate
systems,
structures,
% compliance
with
23
policies and predetermined
processes to KPA timeframes
enable strategy SCM, HR and Systems to measure
OO OO1 implementation OO1.1 SHEQ n/a 75% 0 75% 0 not in place yet
As responsible
public entity
ensure strong
Governance,
Compliance,
Risk and Fraud
Prevention Un-qualified
OO OO2 systems OO2.1 Audit Y Y Y Y Y
Effective
internal controls
During the follow-up
and risk
audit conducted by
management
the internal auditors ,
Internal audit
a total of 102 findings
findings:
were followed up and
Number
: 29 were found to
OO2.2 Repeats n/a 2 70 2 70
have been addressed
Effective ; 27 partially
internal controls addressed and 43
and risk were not addressed.
management This is currently
Internal audit being prioritised.
findings: Information
Number outstanding
OO2.3 unresolved n/a 2 43 2 43

% Compliance
OO2.4 to KING III n/a 50% 67% 50% 67%
% Compliance Currently there is no
to applicable company secretary
legislation in who leads this
OO2.5 Legal register n/a 80% 0% 80% 0% process
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment

%
implementation Draft Strategic Risk
of Integrated register complete.
Risk Framework Risk Committee
and Fraud established and
OO2.6 prevention plan n/a 60% 20% 20% 25% functional
Board member
OO2.7 attendance n/a 80% 83% 80% 67 %

Improved
controls and
risk mitigation,
indicated by
number of
Breaches of
materiality and
significance
OO2.8 framework n/a 0 0 2 0
LEARNING & GROWTH QUADRANT

With increasing
targets and
information
% Achieved of outstanding the
Enhanced the Corporate performance against
Strategic Scorecard scorecard has
LG LG1 Effectiveness LG1.1 Targets 75% 68% 65% 63% reduced
No. of
interactions
between Board
and Executive National Strategy
LG1.2 Authority 2 1 0 1 Session
24
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment

25
Average Board
Committee
Rating of
adequacy of Rating not performed
submissions for quarter 2
LG1.3 (Out of 5) n/a 3 2.4 3 n/a meetings
% MANCO
resolutions
which are
implemented
in prescribed Still setting up
LG1.4 timeframes n/a 90% 0 90% 0 measurements
Divisional
Build Cross- Average performance
Functional Divisional and evidence
Excellence/ Performance requires continued
LG2 Effectiveness LG2.1 Review Scores n/a 3 2 2.5 2 improvement
During the second
% identified quarter 3 additional
critical posts positions were
filled by filled adding up to
predetermined 70.8% of the critical
recruitment positions filled as at
LG2.2 time n/a 80% 58% 60% 70.8% 31 December 2013.
1. Developed draft
No. of PDP guidelines; 2.
organisational Draft policy gap
beneficial analysis report and
Develop schemes 3. Process flows
Operational developed and for learnerships,
Competence successfully recruitment, and job
LG3 (individual) LG3.1 implemented n/a 2 0 1 3 evaluation.
110 employees were
% trained during the
implementation second quarter in line
LG3.2 of PDPs 70 85% 0 10% 31% with the PDPs.
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment

There were 9
terminations during
LG3.3 % Staff Turnover 9% 6% 3.3% 4% 5.88% the 2nd quarter.

110 employees and 17


DWA Total learners were trained;
Number Of the full operation
staff presently of the Learnership
on Training Academy has been
courses, delayed due to the
learner-ships, project charter which
LG3.4 bursaries 21 150 29 25 127 is yet to be approved.

Achieved

Partially Achieved

Not Achieved

Information Outstanding
26
27
Chapter 5

Directives by Minister
Amatola Water received one directive as defined in section 41 of the Water Services Act from the Minister
since the last business plan. The directive details were as follows:

Directive Purpose: Prepare a due diligence report for Amatola Water to be realigned into the
Southern Regional Water Utility
Due Date: 31 March 2014
Date Issued: 3 February 2014

The organisation has complied with the directive and successfully submitted the required Due Diligence
Report for the Southern Regional Water Utility to the Minister of Water and Environmental Affairs on 31
March 2014.
28
Chapter 6

Participation in Companies, Trusts or


Joint Ventures and Transactions
Amatola Water does not envisage participating in any separate company, trust, joint ventures or similar
transactions for the next five year period in the implementation of its strategy. However should such
an arrangement be required it will be developed in accordance with the organisations materiality and
significance framework discussed in Chapter 15.
29
Chapter 7

Water Resource Development and


Inter-Basin Transfer Schemes
Water resources development and inter basin transfers is part of the organisations primary business.
The organisation makes a contribution in this regard through the annual dam management contract
with the Department of Water Affairs. This contract has a direct impact on the organisation’s primary
business in terms of raw water adequacy and quality control.

Contractual Obligations with the Department of Water Affairs

Amatola Water’s contractual relationship with the Department of Water Affairs (DWA) relates to
arrangements concerning the bulk supply of raw water to Amatola Water and the operation and
maintenance of state dams.

Raw Water Supply Agreement

During 2001/02 Amatola Water and the DWA entered into negotiations to conclude a formal Raw Water
Supply Agreement. The seventh draft generic agreement was produced during the 2007/08 financial
year. This agreement has not been concluded to date because the detail in terms of water quality
standards is still to be agreed upon.

The current arrangement of raw water consumed by Amatola Water being billed by DWA according to
the monthly volumetric consumption will continue for the foreseeable future.

Operating and Maintenance Management Agreement of Dams

The Operation and Maintenance Management Agreement that Amatola Water entered into with the
DWA to manage dams in its area continues on an annual basis. This agreement shall remain in effect
until terminated by mutual agreement or through changes in legislation. The contract requires Amatola
Water to maintain 21 dams within its supply area on behalf of DWA.

Projected Demand

Description of Ma jor Consumers or Consumer Groups and Projected Demand


The following table indicates the raw water extracted and the projected water demands to the Amatola
Water’s Water Treatment Works (WTW) and the related dams which are maintained by the organisation:
30

m3/annum
Water Treatment Dam & Registered
Works 06/07 Abstractions 2014/15 2015/16 2016/17 2017/18 2018/19
Nahoon
Nahoon 5 700 000 13 065 118 13 430 118 16 350 118 17 080 118 17 810 118
Laing
Laing 8 400 000 10 111 029 10 212 139 10 708 461 10 864 820 10 914 095
Sandile
Sandile 7 400 000 7 134 812 7 432 221 9 906 221 10 234 721 10 563 221
Rooikrantz
Rooikrantz 4 530 000 4 713 356 4 760 489 4 808 094 4 856 175 4 904 737
Debe
Debe Nek 680 000 817 778 825 956 1 336 956 1 400 831 1 464 706
Sandile
Peddie
Regional 1 500 000 2 779 738 2 807 536 3 683 536 3 793 036 3 902 536
Mnyameni
Masincedane 640 000 854 239 862 781 1 154 781 1 191 281 1 227 781
Dabi
Dabi 30 000 - - - - -
Binfield Park
Binfield 2 370 000 1 983 673 2 003 509 2 762 709 2 857 609 2 952 509
Mnyameni
Upper
Mnyameni 100 000 106 295 107 358 108 432 109 516 110 611
Lower Fish
Glenmore 180 000 259 873 262 472 265 096 267 747 270 425

Boesmans Albany Coast RO


River Plant + Wells 826 329 834 593 842 939 851 368 859 882

Table 1

A key initiative for the 2014/15 financial year will be to apply to DWA for increased abstractions from the
abovementioned dams to cater for the current and projected demands where these exceed current registrations.
31

Water Resource Conservation

Amatole Bulk Water Supply System:


Nahoon / Laing / Wriggleswade / Bridle Drift / Rooikrantz/Maden/ Gubu Dams
The above mentioned dams form part of the Amatole System. Amatola Water had been monitoring water
losses within this bulk treatment and distribution systems on a continued basis since the inception of the water
boards activities within the region. Amatola Water has been assisting DWA in the control of growth/spread of
water hyacinth on the Laing and Wriggleswade Dams. These activities will continue for the next five years.

Keiskamma Catchment
Sandile /Debe/Mnyameni/Cata/ / Pleasant View/ Binfield Park Dams
The above listed dams are located within the Keiskamma River Catchment. Water conservation
interventions per dam are detailed below.

Sandile Dam
Sandile Dam supplies raw water to the Sandile and Peddie Regional water treatment works (WTW)
for potable use. Raw water is released from Sandile Dam via the Keiskamma River to Craighead Weir,
from where it is pumped to the Peddie WTW. In terms of ensuring sufficient amount of water available
at Craig Head Weir, Amatola Water releases a constant stream of 210ℓ/s (6,6 Million cubic meters per
annum, or 550 000 cubic meters per month) from Sandile Dam.

Between Sandile and Craighead weir, there are significant water losses caused mainly by farmers on
route, abstracting water from the Keiskamma River. Craighead Weir is approximately 143 km downstream
of Sandile Dam. As none of the farmers are monitored for abstractions by DWA it is difficult for Amatola
Water to determine what the correct release should be for the system. The monitoring of the abstraction
of the farmers by DWA would enable the release to be accurately defined and implemented.

Amatola Water has been investigating the option of piping potable water directly from Sandile Water Treatment
Works to the Peddie Scheme and Port Alfred. This would provide a suitable solution to DWA to minimize the
conveyance loss of about 4 million cubic meters per annum (approximately 11Mℓ/day) from Sandile Dam to the
Craighead Weir. Studies undertaken by Amatola Water during 2012 to 2014 years shows that the supply of potable
water from the Sandile Water Treatment Works to the existing BCMM, ADM and Ndlambe Municipalities will be
the most economical way to do this. A cost comparison was done between the Sandile WTW augmentation
option and various alternative options within Ndlambe to address the Ndlambe long term water needs. This
included water supply options such as ground water, and or, abstraction from the lower Fish River inclusive
of Reverse Osmosis (RO) processes. The results of the study shows that Sandile WTW augmentation option
which will require the raising of Sandile Dam by a further 10m to be the cost beneficial option. At a stakeholder
meeting held between all affected parties in March 2014 it was decided that Amatola Water must prepare a pre-
feasibility report which is to be submitted to DWA for revue and consideration. The result of the implementation
of such a regional scheme will lead to major raw water savings and optimization of water use.
32

Debe Nek Dam


Debe Nek Dam supplies raw water to the Debe Nek water treatment works for potable water production.
Amatola Water is managing water losses on bulk conveyance systems on a continued basis and there
are no significant water conservation issues at this resource.

Mnyameni Dam
Mnyameni Dam supplies raw water to the Masincedane and Upper Mnyameni water treatment works. A
portion of the available yield of Mnyameni Dam is allocated for irrigation purposes, supplying the high laying
agricultural lands within the Keiskamma valley in conjunction with Cata Dam. Amatola Water is monitoring
water losses on a continued basis within the two schemes. There appears to be a number of illegal
connections causing water losses on the bulk distribution side to be on the high side. Through continued
water loss management processes Amatola Water is taking action to reduce these losses to the minimum.

Cata Dam
Cata Dam is only supplying irrigation water to the farmers within the Keiskammahoek valley and there
are no significant water conservation issues at this resource.

Pleasant View and Binfield Park Dams


Pleasant View Dam
Pleasant View Dam is currently only utilized as an irrigation scheme and actually not in use at the
moment. There are no significant water conservation issues at this resource.

Binfield Park Dam


Binfield Park Dam provides raw water for irrigation, domestic and industrial use. Raw water is treated
at the Binfield Park WTW and the Alice WTWs. Potable water is supplied to Alice and villages within the
Gaga Tyume area. Amatola Water is monitoring water losses on a continued basis within the Binfield
scheme. As it has been agreed between ADM and AW during 2013/14 year to move the bulk billing points
for the Binfield scheme to the outlet of the works and not at each village any more, it has now become
the responsibility of ADM to monitor the bulk water use/losses within the bulk network. The reason for
this decision has mainly been due to the fact that all bulk distribution infrastructure belongs to ADM.

The volume raw water abstracted by farmers for irrigation purposes from the raw water pipe line
between Binfield Park Dam and Alice is not monitored. A raw water meter has been installed at the dam
to monitor total monthly raw water abstractions. Raw water losses can be reduced, if DWA decides to
request that the farmers abstractions for agricultural use be monitored through a proper bulk water
metering system. There are no raw water meters on these agricultural off- takes on route, thus bulk
raw meters need to installed on the system. Funding would be required to do this. The situation of
uncontrolled abstraction by irrigators is not a healthy situation. The installation of raw water meters
and implementing a monthly raw water abstraction monitoring system for irrigators is a necessity.
Amatola Water needs guidance from DWA officials on how DWA wants to deal with this matter. A proper
monitoring system on all raw water abstraction could promote ma jor raw water savings.
33

Glenmore System
The Glenmore WTW abstracts water from the Glen Boyd Dam irrigation pipeline which forms part of the
Lower Fish Government Water Scheme. Annual water use is in the order of 300 000 cubic meters per
annum and losses minimal. The bulk distribution system is under management of ADM.

Bushmans River System


The Bushmans River Reverse Osmosis water treatment works abstracts water from sea wells (boreholes
within the river mouth dunes) as well as some inland boreholes. All the abstraction points are metered
to ensure the resources are not over abstracted. Amatola Water has also created a water balance
monitoring system to monitor the operational efficiency of the RO plant to ensure that the brine
discharge volume remains within design parameters.

Raw Water Supply to Local Municipalities

Raw water is managed and supplied on behalf of the DWA to the following consumers or groups of
consumers, with the projected water demands being shown in the next three tables:

Buffalo City Municipality

m3/annum

Water Treatment Works 2014/15 2015/16 2016/17 2017/18 2018/19


Rooikrantz dam (to King
William’s Town WTW) 3 884 687 3 923 534 3 962 769 4 002 397 4 042 421

Table 2

Nkonkobe Municipality (ADM)

m3/annum

Water Treatment Works 2014/15 2015/16 2016/17 2017/18 2018/19

Binfield Dam (to Alice WTW) 1 940 656 1 960 062 1 979 663 1 999 460 2 019 454

Table 3

Amahlathi Municipality (ADM)

m3/annum

Water Treatment Works 2014/15 2015/16 2016/17 2017/18 2018/19

Gubu dam (to Stutterheim WTW) 1 752 870 1 770 399 1 788 103 1 805 984 1 824 044

Table 4

The raw water is utilised by the respective municipalities to produce potable water for consumers.
34

Industry
Da Gama Textiles is the only ma jor industry to be supplied with raw water by Amatola Water. This
industry is supplied from the Rooikrantz dam. Expected demand is shown in the following table:

m3/annum

Water Treatment Works 2014/15 2015/16 2016/17 2017/18 2018/19

Rooikrantz dam 714 085 721 225 724 832 728 456 732 098

Table 5

Da Gama used about 110 000 cubic meters per month in the past financial year. This equates to a
reduction of approximately 55000 cubic meters per month due to the re-use process as well as a
decrease in demand for material from the textile factory.

Individual / Industrial / Irrigation consumers


Individual customers on route of the Nahoon rising main are supplying a number of farmers with potable
water. A small volume of the potable supply is also supplied to nearby industry. Further two farmers are
utilizing a small volume per month for micro irrigation use. The expected demand is outlined in the
following table.

m3/annum

Water Treatment Works 2014/15 2015/16 2016/17 2017/18 2018/19

Nahoon dam 226 144 228 405 230 690 232 996 235 326

Table 6

Amatola Water does not foresee significant growth in supply to individual consumers in the future.

Growth in Water Demand

General
In determining projected demands as discussed above, cognisance has been taken of growth arising from:

• New water supplies to communities in terms of backlog elimination;


• The need for higher levels of service from communities; and
• Natural population growth.

The Amatola Water Infrastructure Master Plan (IMP) projects a modest water demand growth in Amatola
Water’s schemes from 107Mℓ/day in 2014/15 to 128Mℓ/day in 2018/19. Water demand growth is based on
an annual growth at 1% per annum.
35

A key future consideration that will impact on demands is the requirement of higher levels of service.
The National Development Plan encapsulates this requirement and provides a vision of access to
running water in every household by 2030. Amatola Water has referred to the Guidelines for Human
Settlement Planning and Design to determine an appropriate level of supply to support the 2030 vision.
The organisation is therefore positioning itself to be able to supply a minimum bulk supply of 750ℓ per
household per day over the next five year period. This will be achieved in part through the augmentation
of water treatment, bulk infrastructure distribution and storage capacities. This augmentation is an
absolute necessity as a number of the water treatment plants are operated on a daily basis above
100% of its treatment capacities. At the same time Amatola Water will continue to have a key focus on
improving water demand management and conservation interventions.

Amatole Bulk Water Supply System


Nahoon / Laing / Wriggleswade / Bridle Drift / Rooikrantz/Maden/ Gubu Dams
Growth in water demand for the Amatole System is discussed under the Water Resources Inter-Basin
Transfer Supply Scheme Supply Capacity and Development section.

Keiskamma Catchment
Sandile /Debe/Mnyameni/Cata/ / Pleasant View/ Binfield Park Dams
The above listed dams are located within the Keiskamma River catchment.

Sandile Dam
The Planning Review Report of the Sandile Regional Water Supply Scheme of 1987 reports the safe
yield of Sandile Dam is regarded as 18 million cubic meters per annum of which 11.6 million cubic meters
per annum at an assurance of 98% for domestic use and the balance earmarked for irrigation at an
assurance of 90%. It further states that the Sandile WTW has been designed and constructed in such
a way for future doubling up in treatment capacity at the same site. The Sandile and Peddie Regional
Water Treatment Works are operated/utilized at 100% and above their treatment capacities, thus the
need to increase treatment capacities at both these works.

At the same time various options of augmenting potable water supply to the Ndlambe Municipal area
have been under investigation. Sandile dam has been identified as potential source of water to augment
the existing water supply system within the Ndlambe municipality. The study undertaken considered
sufficiency of yield from the Sandile dam to meet the estimated future water demands of the end
users. It further considers the potential benefit to both Ndlambe Local Municipality (NLM), as well as
the current users of the Sandile and Peddie regional schemes( Amatola District Municipality (ADM)
and Buffalo City Metropolitan Municipality (BCMM)) if the new proposed Sandile-Ndlambe bulk supply
scheme is combined with the existing Sandile and Peddie regional supply schemes.

The current domestic allocation from the dam is deemed for supply of the current users, such as
BCMM and ADM. There is no surplus yield available from the Sandile dam to allocate towards NLM. The
proposed initiative entails the establishment of Sandile Regional Supply Scheme that will incorporate
36

the current Peddie WTW and extend supply to the Ndlambe LM. The total future (2035) domestic water
demand from the Sandile system is expected to be 20.37 million cubic meter per annum (55.8 Mℓ/day).

The potential dam-raising options are being analysed for Sandile Dam, taking into account expected
long term water demand requirements.

The historical firm yield for Sandile Dam is estimated to be 20 million m3/a. The historical firm yield for
Sandile Dam raised if raised by 4m is estimated to be 24.8 million m3/a and if raised by 10m is estimated
to be 27.6 million m3/a.

It was decided at a meeting held with all stakeholders during April 2014 that a preliminary design report
in terms of the Sandile Dam augmentation to be submitted to DWA for further consideration.

A critical intervention for the next five year period will thus be the consideration of the augmentation of
the Sandile Dam to meet this expected future long term demands.

Debe Nek Dam


The current demand from Debe Dam for domestic use is in the order of 0.800 million cubic meters per
annum. To meet the expanded medium to long term potable water requirements Amatola Water has
appointed consultants to do a feasibility study considering the options of increasing treatment capacity
from 1.5Mℓ/d to 5.0Mℓ/d. This action will increase the demand on raw water supply from the current
0.800 million cubic meters per annum to 1.825 million cubic meters per annum for domestic purposes
from Debe Dam. Debe Dam has sufficient capacity to accommodate this increase in demand as it has a
safe yield of 2.15 million cubic meters per annum.

Mnyameni Dam
The current demand from Mnyameni Dam by the Upper Mnyameni WTW and Masincedane WTWs for
domestic and industrial use is in the order of 1.39 million cubic meters per annum.

To meet the expanded medium to long term potable water requirements Amatola Water has appointed
consultants to do a feasibility study considering to increase treatment capacity from 4.0 Mℓ/d to 6.0
Mℓ/d. This action will increase the demand on raw water supply from the current 1.39 million cubic
meters per annum to 2.15 million cubic meters per annum for domestic purposes from Mnyameni Dam.

The current irrigation allocation out of Mnyameni dam is 0.7 million cubic meters per annum, while the
Ciskei Development plan indicates the safe yield is in the order of 2.3 million cubic meter per annum,
thus materialising in a possible shortfall, however recent operating rules checking the safe yield of the
Keiskamma Catchment indicates a yield of 4.0 million cubic meters per annum for Mnyameni Dam; this
is however from a draft report, thus the results are still to be accepted by DWA and therefore actual
available spare yield is to be confirmed for future development purposes.
Cata Dam
37

Cata Dam is only supplying irrigation water to the farmers within the Keiskammahoek valley and is
therefore not part of Amatola Waters water demand planning at present.

Pleasant View and Binfield Park Dams


Pleasant View Dam
Pleasant View Dam is not in use at the moment and is therefore not part of Amatola Waters water
demand planning at present.

Binfield Park Dam


The current demand from Binfield Park Dam for domestic and industrial use is in the order of 3.2 million
cubic meters per annum. To meet the expanded medium to long term potable water requirements
Amatola Water is in the process of considering increasing treatment capacity from 4.8 Mℓ/d to 10 Mℓ/d.
This action will increase the demand on raw water supply from the current 3.2 million cubic meters per
annum to 4.3 million cubic meters per annum for domestic purposes from Binfield Park Dam. This is well
within the firm yield of 16.5 million cubic meters per annum of the dam.

Glenmore System
There is very little growth is expected within this scheme. There is however plans to link this scheme with
the Peddie Regional Scheme within the next two years. This intervention will have the benefit increasing
regional economies of scale thus improving long term sustainability.

Bushmans River System


The demand on the Bushmans River Reverse Osmosis water treatment works is expected to grow slowly
over the next five year period. Shortfalls in available resources is also addressed within the Ndlambe
Bulk Water Supply Option Study. Additional ground water sources will be sought should demand begin
to rise above projected levels via additional sea wells.

Assurance of Supply at which Demand is to be Supplied

The Infrastructure Master Plan (IMP) of 2003 indicates that there is a reasonable assurance of supply to
all water treatment works, with the exception of the Rooikrantz, Laing and Nahoon schemes. The inter-
basin transfers that are possible from the Wriggleswade Dam to Laing/Bridle Drift and Nahoon Dams
are, however, sufficient to overcome this problem when it arises as reflected in table 7.

The recent Reconciliation study undertaken by DWA of the Amatole System that has recently been
completed, indicates that with the implementation of the Ecological Water Requirements, it will be
necessary to either augment the supply or to implement certain strategies such as water demand
management or other measures to address this. If the affected Water Service Authorities and Amatola
Water implement these strategies in an aligned and consistent manner then the need to implement the
construction of a new scheme can be postponed.
38

The strategies have been finalized, and the necessary bodies to manage the process have been put in
place by DWA. The Amatole Systems Strategy Steering Committee and the Technical Support Group
have been established for this purpose and are supported by consultants appointed by DWA to ensure
the Amatole System is managed in a sustainable manner.

Projected Water Availability and Resources Development

Projected Water Availability


Projected water use figures have been registered with the DWA and a water use license was issued to
Amatola Water during June 2002. These registered volumes have been adjusted over the past financial
years. Amatola Water updated the required registered volumes as reflected in Table 7. The application
for registration of revised volumes will be done in the 2013/14 financial year. Current registered volumes
are contained in Table 1.

The table estimates that the Nahoon, Rooikrantz and the Albany Coast systems have projected raw
water shortfalls for the 2013/14 financial year onwards while the Sandile system will have shortfall in
the 2016/17 financial year taking into account the irrigation allocations as well. The Nahoon shortfall
will be provided via transfers from the Wriggleswade dam. The Rooikrantz shortfall will be managed
by implementing strict operating rules that ensure that a critical low supply levels that potable water
shortfalls are supplied to consumers via the Laing system. The Albany Coast system shortfall is also
managed under strict operating rules in combination with consumers being required to provide for
onsite water supplies via rain water harvesting installations.

Table 7 highlights that the ma jority of dams that Amatola Water uses for raw water supply. Environmental
water requirements and allocations have not been finalized on any of the schemes. DWA has completed
the determination of the environmental flow requirements and potential environmental impacts of
possible future developments on the Amathole System. Guidance is outstanding at present on the how
the required environmental releases will be implemented.

A drought/system management model has been set up to be used to utilize the water within the systems
effectively. The system is monitored on an annual basis to ensure that the proposed strategies are
implemented in time.

Resource Development
Table 7 indicates that there is reasonable assurance of supply in the region if no releases are made
for the environment. The Maden/Rooikrantz dams showed a shortfall of 2.010 million m³/a, which is
currently being addressed by DWA. The Department is reviewing the allocations from Rooikrantz Dam in
consultation with all relevant stakeholders. The Amatole Reconciliation study provides some guidance
on the way forward on the allocations.
Surplus (+)/ Surplus (+)
Raw water Raw water Raw water Raw water Raw water shortfall / shortfall

39
Capacity in Total firm Urban/ use in use in use in use in use in (-) for (-) for
Dam Mm3 (Live yield Domestic Irrigation Environmental 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2014/2015 2018/2019
Names storage) Mm3/a Mm3/a Mm3/a Mm3/a in Mm3/a in Mm3/a in Mm3/a in Mm3/a in Mm3/a in Mm3/a in Mm3/a

Binfield Park
Dam 36.850 16.500 1.000 8.000 0.000 3.220 3.253 3.253 4.146 4.261 5.280 4.239

Cata Dam 12.100 6.200 0.000 5.300 0.000 0.000 0.000 0.000 0.000 0.000 0.900 0.900

Dabi Dam 1.000 0.050 0.033 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.050 0.050

Debe Dam 6.000 2.150 0.350 0.000 0.000 0.818 0.826 1.337 1.401 1.465 1.332 0.685

Gubu Dam 8.800 2.870 2.300 0.783 0.000 1.753 1.770 1.788 1.806 1.824 0.334 0.263

Laing Dam 19.800 18.270 14.900 1.900 0.000 10.111 10.212 10.708 10.865 10.914 6.259 5.456

Mnyameni
Dam 2.060 4.000 0.450 0.700 0.000 0.961 0.970 1.263 1.301 1.338 2.339 1.962

Nahoon Dam 19.900 8.410 5.600 1.250 0.900 13.065 13.430 16.350 17.080 17.810 -6.805 -11.550

Pleasant View
Dam 2.000 0.000 0.030 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

Rooikrantz /
Maden Dam 4.800 4.180 3.100 1.240 0.000 4.757 4.804 4.852 4.901 4.950 -1.817 -2.010

Sandile Dam 30.960 18.000 11.600 6.800 0.000 9.915 10.014 13.590 14.028 14.466 1.285 -3.266
Wriggleswade
Dam 91.210 31.800 16.900 3.000 0.000 0.000 0.000 0.000 0.000 0.000 28.800 28.800

Glen Boyd
Balance Dam 0.150 1.000 0.000 0.000 0.000 0.260 0.262 0.265 0.268 0.270 0.740 0.730

Albany Coast 0.520 0.802 0.000 0.000 0.826 0.835 0.843 0.851 0.860 -0.306 -0.340

Total 235.63 113.950 57.065 23.173 3.900 45.685 46.376 54.249 56.646 58.158 38.392 25.919

% of Firm Yield
for domestic use 50% 20% 3% 40.1% 40.7% 47.6% 49.7% 51.0% 33.7% 22.7%

% of Firm Yield
for all uses 74% 63.9% 64.5% 71.4% 73.5% 74.8% 57.5% 46.5%

Table 7 - Dam capacity in million cubic meters for ma jor dams


40

Water Resources Inter-Basin Transfer Supply Scheme Supply Capacity and Development

Amatola Water draws raw water from a number of systems. The Amatole system is however the only
inter-basin transfer supply system within Amatola Water supply area.

Amatole Water Resource System


The Amatola Water Resources Systems supplies the water requirements of the Buffalo City Municipality
consisting of East London, Mdantsane, King William’s Town and Bhisho urban complex, the town of
Stutterheim and Mlungisi, and villages in the surrounding rural areas.

The water resources of the Amathole System are regulated by seven dams namely, Gubu, Wriggleswade,
Maden, Rooikrantz, Laing, Bridledrift and Nahoon Dams.

The main purpose of Wriggleswade Dam, which was built during the period 1990 to 1994, was to
supplement the shortfall for industrial and domestic use in the East London area. The Amatole System
is expected to have sufficient raw water storage until 2022 taking the effect of HIV/AIDS and migration
patterns into account excluding environmental water requirements. This date of 2022 is conditional
depending on which scenario and strategy is implemented successfully at a specific time.

The Wriggleswade Dam provides an additional safe yield of 31.8million m3/a, of which approximately
18 million m3/a, should be available for domestic or industrial use. The finalisation of the volume of
water required for environmental purposes will reduce the available yield for domestic / industrial use
and thereby moving the augmentation date forward.

Various water demand strategies has been compiled and tabled in the report which needs to be
implemented by the relevant stakeholders in the near future. The effective implementation of these
strategies will then determine the expected augmentation date within the Amatole System.

A study to determine rules to optimise the operation of the System has been initiated by DWA and
completed by the Operating Rules Study Team. The operating rules, which have since been approved by
DWA, entail a transfer of water from the Wriggleswade Dam to dams downstream in the System, when
the water levels in these lower dams drop to predetermined levels. The transfer rates are such that they
sustain the requirements on the dams only and are not used to re-fill the dams. The ASATSG has reviewed
the system yield, based on the adopted operating rules, using the Water Resources Yield Model.

The ASATSG has further reviewed the system yield, based on varying operating rules, the results of which
indicate that the system yield could be further increased to 108.1 million m3/a by adjusting the transfer trigger
dam levels of the downstream dams under scenario 1, i.e. transfer water when Wriggleswade Dam is spilling. The
yield of the System, when operated as an integrated system in accordance with the current approved operating
rules, is some 5.2 million m3/a (5.4%) greater than the sum of the yields of the individual dams. Integrated system
operation is therefore an imperative to ensure reconciliation of supply and requirement going forward.
41

Agreements have not as yet been concluded with BCMM to facilitate the effective implementation of the
new adopted operating rules. Despite the above, the system yield of 100.1 million m3/a, has been used as
the basis for the current reconciliation planning.

The higher possible yield of 108.1 million m3/a (as per ASATSG presentation of June 2012) has however
been considered as a scenario in the reconciliation planning.

Status of Water Resources and Inter-Basin Transfer Infrastructure

The capacity of Wriggleswade Dam can be utilised to supplement either the Bridledrift and or Nahoon
Dams. This is made possible by a tunnel and canal system that has the capacity to transport 3m3/ sec
(259 200 Kℓ/day) either into the Buffalo River and/or Nahoon River catchments. Water can be released
into the Yellowwoods River that flows into the Buffalo River to supplement Laing and Bridle Drift Dams
and/or into the Nkobongo River that flows into the Nahoon River, feeding into the Nahoon Dam.

Previous environmental studies on the KwaNkwebu River, a tributary of the Yellowwoods River, recommend
limiting the rate of transfer between the Wriggleswade and Laing Dams to a rate lower than that for
which the transfer system had been designed, in order to protect an environmentally sensitive reach
of the river. It was initially envisaged that this would limit the yield possible from the System, requiring
by-pass infrastructure to circumvent the constraint.

The new adopted operating rules are however such that transfers are undertaken at lower rates, but
over longer periods of time, thereby avoiding the need for by-pass infrastructure to ensure that the
system yield is achievable. The Amatole Supply System Operation Co-ordination Committee (ASSOCC)
is however still required to review the need for pedestrian bridges across the river.

Figure 1 shows the current high- and low-growth water requirement scenarios against supply available
from the System, as per the current operating rules. Similar graphs have been provided for system yields
based on the individual dams, as well as for various proposed amendments to the current operating rules.

Based on the high-growth water requirement scenario, measures to reduce the requirement or to
increase the system yield would have to be implemented by:

• Yield of individual dams (94.9 million m3/a) : 2018


• Current operating rules (100.1 million m3/a) : 2021
• Maximum yield possible from the System (108.1 million m3/a) : 2026

Based on the low water requirement scenario, the System has adequate yield to meet the requirements
inclusive of supplies to the Great Kei area indefinitely
42

Amatole Water Supply System

Figure 1

The ASATSG has undertaken a conceptual (desktop) review of the Sandile/Binfield Park Dams supply
augmentation option, identified in the Strategy Study as one of the more favourable augmentation
options due to its low URV and short lead time (no need to construct a dam; it uses surplus yields from
these existing dams). The findings of the review however indicated that the surplus yields available
from these dams to augment supplies to the AWSS are significantly lower than previously anticipated
and that more detailed investigations are required to confirm the dam yields. The need to register and
monitor water use from these dams was also identified. It can also be noted that the Department of
Agriculture and Rural Development (DoARD) are reviewing the agricultural water requirements from
these dams, whilst DWA have initiated processes to develop operating rules for the respective dams.

A screening of surface water supply options has been completed. The following schemes/options are
considered the most viable of the options identified to date and should be put forward for more in-
depth study for consideration for implementation:

• Wesselshoek Dam (Kwelera River) – the most favourable of the options at this point in time;
• Ravenswood Dam (Keiskamma River) – only if a large yielding dam is required; and
• Stone Island Dam (Nahoon River) – potential environmental implications.
43

Maintenance to Dams
All storage infrastructures in the form of dams belong to the Department of Water Affairs and capital
improvements and maintenance are planned and funded by the Department.

At Rooikrantz Dam ma jor refurbishment on the inlet works is required. Currently the service gate has
been removed and scrapped. The Department of Water Affairs Head office is designing a new service
gate, and delivery is anticipated in two years, after which the refurbishments of the inlet works will
commence. Divers have inspected the outlet structure recently. The overhead gantry crane was installed.
One of the gate valves is not working and need to be replaced. Delays in this regard have been the result
of non appointment of the maintenance service provider by DWA.

The maintenance work undertaken by DWA at Laing Dam is being severely delayed and this has resulted
in Amatola Water siphoning raw water over the spillway to the Laing Water Treatment Works. The inability
of abstracting raw water at the pre-determined levels of the dam has resulted in poor raw water quality
being treated at the works. Consequently this has resulted in higher than normal operating cost. A new
pipe line is under construction from the dam wall to the works and will be completed by June 2014.

Repair work on the Nahoon Dam intake tower by the Department of Water Affairs has commenced but
has not been completed; project has been on hold due to Departmental supply chain management
hurdles in appointing a suitable maintenance contractor.

Operations and Maintenance of Water Resources and Inter-Basin Transfer Infrastructure


Amatola Water maintains and operates 21 dams as governed by the agreement entered into with the
Department of Water Affairs. The water board compiles an annual budget covering maintenance and
operating items for review and approval by the Department of Water Affairs.

In the new financial year, the Department of Water Affairs has approved a budget of R11.06 million. The
Department of Water Affairs and Amatola Water meet quarterly to facilitate the management contract,
through discussion of issues pertaining to normal operations and maintenance, including dam safety
and ad hoc work.
44
Chapter 8

Bulk Potable Water Supply Plan


Planning

Infrastructure Master Plan


Amatola Water developed an Infrastructure Master Plan (IMP) in 2002 to guide the organisation in terms
of upgrading, extending and replacing its water production and distribution infrastructure. This plan has a
20 year horizon and has guided the organisation’s capital expenditure programme over the past decade.

Amatola Water will revise its IMP in the 2014/15 financial year to align with its new strategy. In particular,
emphasis will be placed on ensuring there is sufficient bulk water production capacity to meet the
demands for higher levels of service within its supply area.

Amatola Water will also continue to offer infrastructure master planning services to its clients. Master
planning work has been undertaken for the ORTDM in the 2013/14 financial year. The entire ORTDM will
be supplied from three anchor dams including the Mthatha, Ntabelanga and the Mzintlava Dams that
make provision for water service provision to every household and provisions for higher levels of service
as envisaged in the National Development Plan. Similar Master planning has been completed for the
Ndlambe Municipality where bulk water will be provided to the entire area from the Sandile Dam which
will need to be raised by 10metres by the Department of Water Affairs in the medium term.

High level master planning work has also commenced at a provincial wide level in anticipation of the
creation of the regional water utilities envisaged in the National Development Plan. This work has been
included in the required Due Diligence Report for the establishment of the Southern Regional Water
Utility submitted to the Minister of Water and Environmental Affairs on 31 March 2014.

Provincial Water Sector Planning


The organisation has been involved in various provincial water sector planning activities and forums
in the past. This will continue and the organisation intends to position itself as a more significant
roleplayer in this regard over the next five year period. Specific interventions will include expanding
existing business systems including the GIS and telemetry to provide the basis for developing an Eastern
Cape water specific business intelligence system. This system will have linkages with other relevant
databases in the province.

High level master planning work has also commenced at a provincial wide level in anticipation of the
creation of the regional water utilities envisaged in the National Development Plan. This work has been
included in the IRR Due Diligence Reportsubmitted to DWA on 31 March 2014. Amatola Water will continue
to refine this high level planning with relevant stakeholders in anticipation of the creation of a regional
water utility that will serve the Eastern Cape Province in the near future.
45

Section 29 Business

Contractual Obligations with Customers


All agreements between customer institutions and Amatola Water are circumscribed by requirements
set out in the Water Services Act, the National Water Act, and other relevant local government legislation.
The legislation provides for water board business relationships to be concluded with the recognized
water services authorities that have been tasked with the administration of water services delivery.

Amatola Water regularly reviews its current capacities and assesses the needs of District and Local
Municipalities to ensure any opportunity to expand its primary business of bulk potable water production
is identified and pursued. Amatola Water regularly invests considerable effort to initiate, deliberate and
conclude supply relationships and underlying agreements with both district and local municipal entities.
The outcome of this local government partnership activity is outlined below:

Amathole District Municipality


Amatola Water provides bulk raw and potable water services to the Amathole District Municipality
(ADM). The water board had, in line with the SALGA/South African Association of Water Utilities (SAAWU)
guidelines, negotiated a two year supply agreement with Amathole District Municipality, signed on 19
March 2004. This agreement has been extended a number of times; it is currently valid till June 2014
and discussions to extend it by a further three years is underway.

Buffalo City Metropolitan Municipality


Buffalo City Metropolitan Municipality became a Water Services Authority in July 2003, following the
announcement of powers and functions by the Minister of Provincial and Local Government. At the time
of the pronouncement, Amatola Water had already entered into a 30-year supply contract (with an
escape clause) with Buffalo City Metropolitan Municipality. This agreement remains valid.

Ndlambe Municipality
Amatola Water has entered into a bulk water supply agreement with the Ndlambe Municipality to supply
the Kenton on Sea and Bushmans River areas with potable water. The agreement was signed on 30
March 2010 and is a 20 year agreement.

Projected Demand: Description of Major Consumers or Consumer Groups and Projected Demand
The ma jor consumers or consumer groups supplied are:

District Municipalities
The only district municipality being supplied with potable water is the Amathole District Municipality,
(through its local municipalities) as listed in Table 8 below. From the 1st of July 2006 the Amathole
District Municipality has been paying all the accounts for water supplied by Amatola Water to the
various LM’s within Amathole DM. The projected total demands for the District Municipality (responsible
for Amahlathi, Ngqushwa and Nkonkobe Local Municipalities) are as follows:
46

m3/annum
WTW Dam 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019
Laing Laing 1 773 715 1 791 452 1 809 367 1 827 460 1 845 735

Binfield Binfield 1 889 212 1 908 104 1 927 185 1 946 457 1 965 922

Dabi Dabi - - - - -

Debe Debe 689 873 696 772 703 740 710 777 717 885

Glenmore Glen Melville 237 334 239 707 242 104 244 525 246 971
Peddie
Regional Sandile 1 493 581 1 508 517 1 523 602 1 538 838 1 554 226

Rooikrantz Rooikrantz - - - - -

Sandile Sandile 2 969 050 2 998 741 3 028 728 3 059 015 3 089 605
Upper
Mnyameni Mnyameni 108 219 109 302 110 395 111 499 112 614

Masincedane Mnyameni 482 332 487 155 779 155 815 655 852 155

Totals 9 643 317 9 739 750 10 124 276 10 254 227 10 385 113

Table 8

Local Municipalities
Buffalo City Municipality and Ndlambe Municipality projected water demands are as follows:

Buffalo City Municipality

m3/annum
WTW Dam 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019
Nahoon Nahoon 11 928 239 12 293 239 15 213 239 15 943 239 16 673 239

Laing Laing 7 292 743 7 833 528 7 833 528 7 961 138 8 090 024

Rooikrantz Rooikrantz - - - - -

Sandile Sandile 3 196 647 3 228 613 3 260 900 3 293 509 3 326 444
Peddie
regional Sandile 316 597 319 763 1 195 763 1 305 263 1 414 763

Totals 22 734 226 23 675 143 27 503 429 28 503 148

Table 9

Ndlambe Municipality
47

m3/annum
WTW Dam 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019
Kenton-
on-Sea +
Bushmans
River Mouth Sea wells &
Supply- RO Diaz Cross
Plant Boreholes 777 675 785 452 793 307 801 240 809 252

Totals 777 675 785 452 793 307 801 240

Table 10

Individual Consumers
Individual consumers are supplied with potable water directly by Amatola Water only under exceptional
circumstances. In principle, contracts should be entered into with the local or district municipality for
water supply and not with Amatola Water. There are, however, a number of instances where, for historical
or other practical reasons, potable water has been supplied directly to end users by Amatola Water.
Amatola Water is in the process of discussing this topic with ADM to transfer all private accounts to the
ADM. This transfer of private customers to ADM will take effect from 1 July 2014. The respective water
treatment works supplying individuals or groups of individuals and their projected water demands are
outlined in Table 11.

Individuals

m3/annum
WTW Dam 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019

Nahoon Nahoon 77 800 78 578 79 364 80 157 80 959

Laing Laing 16 907 17 076 17 247 17 420 17 594

Rooikrantz Rooikrantz - - - - -

Sandile Sandile 11 409 11 524 11 639 11 755 11 873

Binfield Binfield - - - - -

Peddie
Regional &
Bhirha Sandile 22 958 23 188 23 420 23 654 23 891
Totals 129 075 130 366 131 669 132 986 801 240

Table 11
48

Assurances of Supply to Meet Demand

The Amatola Water infrastructure is upgraded to meet demands as required. The upgrading of
infrastructure is guided by the Amatola Water Infrastructure Master Plan. The plan provides for a 20
year planning horizon.

Amatola Water’s intention is to upgrade and extend six of its water treatment works that supply the
Nkonkobe, Ngqushwa, Amahlathi and Buffalo City Metropolitan Municipalities over the next three financial
years. This will allow for an improved level of service (750ℓ/household/day) which will reduce service
delivery backlogs, improve rural livelihoods and support productive use activities as envisaged in South
Africa’s Constitution and developmentally focused legislation. The additional benefit of extending Blue
Drop quality water (SANS 214 Class 1 water) services to a significant portion of the rural communities
located in the Amathole District Municipality and the Buffalo City Metro Municipality will also be realized.
This will have a significant positive impact on the health of the rural communities to be served by these
water supply schemes.

Nahoon Water Treatment Works

A feasibility study has been conducted at the Nahoon Water treatment Works to determine how the
spare capacity can be utilized to serve the eastern portion of the City of East London and this project
has been included in the organisation’s capital expenditure programme. This project has been planned
in consultation with Buffalo City Metropolitan Municipality representatives to ensure that the sub-regions
infrastructure capacity is efficiently and effectively used to meet the water demand in the future. The
first phase of this upgrade will result in an additional 20Mℓ/day capacity being provided by the 2015/16
financial year. An additional 20Mℓ/day will be provided by the 2020/21 financial year. This additional
capacity will be utilized to supply the eastern side of East London.

Binfield Water Treatment Works

The Binfield WTW, which has a capacity of 4.8 Mℓ/day, was constructed during 1984. The Binfield WTW
is operated at 100% of its treatment capacity at 4.8Mℓ/day. This treatment works has reached its design
capacity and will be upgraded to 10Mℓ/day to make provision for the growing demand in the area and
to supplement shortfalls in the Sandile Dam supply area. A consultant has been appointed to do the
design of this upgrade.

Masincedane Water Treatment Works

The Masincedane WTW with a current design capacity of 4Mℓ/day will be augmented to 6 Mℓ/day to make
provision for the growth in water demand in the area due to the implementation of housing projects by the
Amathole District Municipality within Keiskammahoek which will increase the current output of 2.3Mℓ/d to
4 Mℓ/d in the near future. A consultant has been appointed to do the design of this upgrade.
49

Peddie Regional Water Treatment Works

Amatola Water will upgrade the Peddie Regional Water Treatment Works to increase the plant’s capacity
from 6.5 Mℓ/d to 13 Mℓ/d and improve the raw water supply and potable distribution infrastructure. The
plant supplies water to approximately 13303 households. Currently 1563 households in the supply area
are not served. The plant is currently supplying above its design capacity and does not have any spare
capacity. Sufficient spare yield is available from the water resource to allow for the improved level of
service and sustain the water supply in the area. A consultant has been appointed to do the design of
this upgrade. Note that this upgrade will be done together with the Sandile augmentation option.

Sandile Water Treatment Works

Amatola Water will upgrade the Sandile Water Treatment Works to increase the capacity of the plant from
18 Mℓ/d to 80 Mℓ/d over the next 10 year period. The plant is currently supplying above its design capacity
and does not have any spare capacity. As stated above the Sandile Dam wall will be raised by 10m to
empound sufficient water to supply the entire Sandile, Peddie and the Ndlambe water supply areas.

The first phase of this upgrade is in progress. This will result in the Sandile works being upgraded to 40
Mℓ/day and the linkage between the Sandile and Peddie water supply systems being completed. The
following phase will simultaneously see the dam wall being raised and a further 40Mℓ/day of treatment
capacity being created at the current Sandile works site.

Debe Nek Water Treatment Works

Amatola Water will upgrade the Debe Nek Water Treatment Works to increase the plant’s capacity from
1.5 Mℓ/d to 5 Mℓ/d via the installation of a portable package plant. The associated bulk water conveyance
infrastructure will also be upgraded to improve the level of service to some 2847 households that are
currently supplied by the scheme and also allow for future developments. Currently, 155 households are
not served in the supply area.

The plant is currently supplying above its design capacity. Amatola Water has an active water demand
management programme in place and has maximized water loss savings at present. Sufficient spare
yield is available from the water resource to allow for the treatment works to be upgraded to sustain and
improve the water supply to the area. A consultant has been appointed to do the design of this upgrade.

Impact of Water Conservation and Demand Projections

Various efforts to reduce water losses have been ongoing for a number of years. Routine maintenance
and inspections throughout the abstraction, treatment and distribution infrastructure have been
invaluable in minimising water losses. Furthermore, monthly water balance reviews are used to identify
water losses and to take appropriate action in reducing such losses. One of the tools used in improving
loss monitoring is a telemetric network.
50

A vigorous programme to combat water losses on the bulk reticulation is pursued by Amatola Water,
which includes ensuring that all supply points are appropriately measured and monitored on a monthly
basis. The efforts to better manage water demand in the services region are monitored jointly by all
relevant parties on a continuing basis.

In addition to normal leaks, bursts and overflowing reservoirs, inaccurate or malfunctioning meters
result in apparent losses. Amatola Water reviews its own system infrastructure performance regarding
water loss control on a continuing basis to minimise wastage of the resource. To promote this effort,
it has embarked, during the past years, on the installation and calibration of water meters. Amatola
Water carries out relevant repair and maintenance work on these water meters. Further improvement
on water metering, there are 6 billing and 22 balancing meters connected to the telemetry system for
remote monitoring. Part of the three year telemetry plan is for Amatola Water to identify and connect
additional meters to the telemetry system.

The financial system is also used together with the meter diagrams to compile a parent-child relationship,
as a tool to assist its operations in identifying critical water loss areas. Water balance reports are
compiled on a monthly basis. This data is then used to improve metering and increase revenue. Policies
affecting water balances that have been approved by the Board are listed below:

• Illegal Connections Policy; and


• Meter Calibration and Maintenance Policy.

Amatola Water is in frequent communication with customers regarding the implementation of demand
management programs.

Critical interventions are currently being undertaken that includes the development of a comprehensive
metering programme that will incorporate both infrastructure owned by Amatola Water and managed
under Right of Use contracts.

The organisation’s telemetry system will also be expanded and integrated with current monitoring
systems to ensure the supply of water is monitored and controlled to minimize unplanned interruptions.

Projected Water Availability and Resources Development

Description of Ma jor Sources of Water and Abstraction Rights


Annexure E lists ma jor dams, and compares expected raw water requirements against respective firm
yields, to determine the surplus or shortfall in water supply.

A study undertaken by consultants on behalf of DWA for the Amatole System (Gubu, Wriggleswade,
Laing, Bridle Drift, Rooikrantz and Nahoon Dams) taking the effect of HIV-Aids into account, indicated
that there should be sufficient water available until 2022. It is anticipated therefore that no new resource
51

development is required in the short-term. With the Amatole Water System Reconciliation Study it is
proposed to implement the Environmental Water Requirements, which brings a total new demand into
consideration which will have a serious impact on the availability of resources. This will then move the
augmentation dates for raw water sources forward, however with the proposed strategy framework
to improve water demand management these augmentation dates can be delayed. The registered
volumes need to be adjusted, due to the increased levels of demand. As no final decision has been
taken on the possible implementation of environmental water requirements and it will be discussed
and workshopped during 2014/15 to ensure it is implemented appropriately. A pro-active approach will
support long term forward planning on new water resource requirements.

Ability of Available Resources and Abstraction Rights to Meet Demand

From Annexure E it is clear that most of the schemes will be able to meet the estimated demands.

Any shortfall of water at Nahoon Dam could or will be supplemented from Wriggleswade Dam when needed.
The Amatole Water Resources Systems Analysis suggested that the available yield at Wriggleswade Dam
be split in a 40% to 60% allocation, with 40% of the available yield to Nahoon Dam and 60% of the
available yield to Bridledrift Dam. This was also the best option for obtaining the best water quality results.

Any shortfall in supply from Rooikrantz Dam needs to be supplied from Laing Dam. This is possible by
duplicating the King William’s Town water needs at the Laing WTW. Amatola Water is currently not able
to provide the full additional demand required from the Laing WTW by King William’s Town during times
of drought due to constraints in conveyance capacity.

Over allocation of water from Rooikrantz and Maden Dams (4.6Million m3/a versus the historical firm
yield of 3,3 million m3/a (recent review of the safe yield has increased this number to 4.1 million m3/a
inclusive of Maden Dam) need to be addressed by the Department of Water Affairs by reviewing the
allocations and operational requirements. It is also to be noted that the Rooikrantz WTW was closed
due to the increased treatment capacity of the ADM Kei Road WTW and water is now supplied to the
Rooikrantz area from the Wriggleswade dam, thereby reducing demand on Rooikrantz Dam.

Amatola Water is operating the Rooikrantz Dam in accordance with the proposed operating rules as set
out in the Amatole Water Resources System Analysis phase 2 study.

The reconciliation study and the recently initiated generic operating rules study for drought management
will provide new guidelines on the existing and future capacity of the systems and optional management
requirements. These new operating rules had been finalized and are used in operating the system effectively.

The reconciliation study has a different approach from the previous studies undertaken. The adopted
strategy of the study has not selected a “favoured scenario” but was to identify which interventions and
52

potential assets should be studied to allow for a range of possible water requirement scenarios to be
met through a combination of:

• Interventions that would reduce water requirements;

• Interventions that would result in treated waste water being returned to the water courses to
augment the yields of the dams or to contribute towards the EWR;

• Interventions that would result in treated waste water being reused and

• The creation of bulk water supply assets that would increase the availability of bulk water.

A Decision Support Tool (DST) was developed whereby 13 scenarios were identified which were analyzed
to determine the desired intervention or asset to be implemented by the earliest date identified in the
study. A Strategy Steering Committee was established to roll out and implement the proposed strategies.

Impact of Reducing Water Loss or Improving Unaccounted for Water

The projections in the Amatola Water Infrastructure Master Plan have confirmed that it is unlikely that any new
dams would be needed by 2022, primarily due to the availability of water supply from Wriggleswade Dam.

This date of 2022 is also debatable as, according to the new reconciliation strategy document that makes
provision for environmental water requirements, this date moves forward to 2012 /2017 depending on
which scenario and strategy is implemented successfully at a specific time.

Reducing water loss and improving unaccounted for water will delay further resource development by
contributing to the availability of supply hence the focus by Amatola Water to assist both the Amathole
District Municipality and Buffalo City Metropolitan Municipality with water demand management
programs on reticulation networks where possible.

New Resource Development Required or Being Undertaken as well as Applications for Water
Use Licences

Amatola Water reviews its projected water use on an annual basis. Due to a number of changes in
demand, Amatola Water will review some of the allocated water users in terms of the existing water use
license issued to the water board.

Purchasing of additional water rights


Amatola Water will be requesting adjustment to certain existing allocations, due to the growth in demand
that has increased systematically over the years on certain schemes.
53

Bulk Infrastructure Supply Capacity and Development


Table 12 provides a broad description of the current bulk water supply infrastructure operated by Amatola Water.

Annual
Average Size of
Daily Total length biggest Number of Max. head
Capacity Demand of gravity No. of reservoir pumping on rising
Scheme (Mℓ/day) (Mℓ/day) mains (km) reservoirs (Mℓ) stations mains
Nahoon 33.7 37.26 16 2 13.65 3 115
Laing
(was 27.3 Mℓ/d) 33 27.49 109 57 33 6 250
Sandile 18 20.16 175 41 12 2 141
Peddie
regional
(includes
Bhirha) 6.6 7.42 28 12 5 1
Binfield Park 4.8 4.80 24 8 2.5 1
Bhirha
(closed) 4.3 0.000 46 9 5 2
Masincedane 4 2.3 31 7 1 1
Debe 1.5 2.16 62 21 1 3 65
Rooikrantz 1.2 0.000 35 10 6 3
Dabi 0.72 0.000 15 3 0.3 2 25
Upper
Mnyameni 0.28 0.268 27 9 1 2 115
Glenmore 0.5 0.93 8 1 1 1 65
Albany Coast 3.68 2.69 10 4 5 4 65
Total 112.28 106.722 586 184 86.45 31 841

Table 12

Ability of Current Significant Infrastructure Components to Meet Demand

Amatola Water is in the process of addressing infrastructure development where schemes are operated
at its maximum treatment capacity or even above its maximum capacity.

New Infrastructure Planned

The Amatola Water Capital Expenditure program for the 2014/15 to 2018/19 financial years is presented
in Annexure H. The planned capital expenditure program is funded from revenue generated from primary
and secondary services, grant funding and from loans where required. A summary of the capital budgets
for the next three years is presented in Table 13:
54

Funding Source 2014 2015 2016 2017


Amatola Water Reserves 14 251 337 0 0 0
Loan 0 0 0 0
Grant 0 148 147 841 335 061 351 16 697 500
Totals 14 251 337 148 147 841 335 061 351 6 697 500

Table 13

The planned expenditure programme will result in Amatola Water strengthening its balance sheet and
improving long term sustainability of the organisation. An additional initiative in terms of growing the
organisation’s bulk infrastructure footprint includes engaging DWA to promote the idea of the transfer
of bulk water infrastructure to Amatola Water. The Regional Bulk Infrastructure Grant (RBIG) in particular
is allocated to DWA for implementation and to make the decision to whom ownership of completed
infrastructure shall reside. Amatola Water intends presenting a proposal that it is best positioned to
own and ensure appropriate operation and maintenance of bulk water service infrastructure outside the
Metropolitan areas in the Eastern Cape Province.

Status of Bulk Potable Water Infrastucture

The status of the bulk potable water infrastructure is monitored on a time basis against the following
industry norms for the functional life of elements:

Element Functional Life (Yrs)


WTW Buildings and Civil Works 50
Reservoirs 35
Pumping Station Buildings and Civil Works 35
Pipelines 30
WTW Mechanical 20
Pumping Station Mechanical 20
Pumping Station Electrical 15
WTW Electrical 15
Plant Machinery 5

Table 14

Table 15 provides information regarding the construction dates of the original schemes and extensions,
if any, that have been implemented:

Scheme Year original works were constructed Year extensions implemented Age (years) in 2014
Nahoon 1968 1987, 2009 27
55

Laing 1949 1979, 2005,2009 35


Sandile 1981 2005 33
Peddie Regional 1999 2002, 2008 15
Binfield Park 1986 28
Bhirha 1990 Mothballed
Masincedane 1978 2009 36
Debe Nek 1986 28
Rooikrantz 1987 Partly decommissioned
Dabi 1996 2010 Decommissioned
Upper Mnyameni 1987 27
Glenmore 1986 28
Albany Coast RO 1994 2010 20

Table 15

The infrastructure elements are also monitored on a performance basis – which may be shorter or longer than the
time base norms. In general, the condition of the Building and Civil assets is good since the oldest schemes were
constructed some 30 years ago (compared with the functional life of the buildings and civil works of 50 years).

Electrical assets have been repaired, refurbished or replaced, when necessary. The general conditions status
of these assets is therefore generally very good. The functional life of electrical assets is, however, 15 years and
it is anticipated that replacement of these assets will need to be undertaken by 2014 at the following schemes:

Estimated cost of work stimated cost of work scheduled for: scheduled for:
Scheme 2013/14 2014/15 2015/16 2016/17 2017/18
Laing
MCC’s & LV Switchboards for
booster pumping stations R600 000 R750 000 R0 R0 R0
Nahoon
Isolators / Earthing Switches – 400A R350 000 R400 000 R0 R0 R0
Upgrade old pump station panels R400 000 R0 R0 R0 R0
Upgrade switch gear for and panels
at new pump station (Electrical) R600 000 R1m R0 R0 R0
Masincedane
MCC’s & LV Switchboards R0 R50 000 R0 R0 R0
Debe
Replace electrical panels R 500 000 R0 R0 R0 R0
Totals R 2 450 000 R2 790 000 R0 R0 R0

Table 16
56

A similar comment as for the electrical assets applies to the mechanical assets. The functional life of mechanical
assets is 20 years and it is estimated that the cost of mechanical assets to be replaced by 2014 is as follows:

Estimated cost of work stimated cost of work scheduled for:


Scheme 2013/14 2014/15 2015/16 2016/17 2017/18
Nahoon
Pump R600 000 R500 000 R0 R650 000 R0
Laing
Booster pumps R400 000 R450 000 R500 000
Sandile
High lift Pump R650 000 R900 000
Valves R300 000
Craighead
3 High lift Pumps
Pump set R900 000 R600 000
Totals R 2 550 000 R1 850 000 R0 R1150 000 R900 000

Table 17

As a result of the intensive refurbishment programmes, water treatment facilities are generally in a good
working condition.

Networks and reservoirs are generally in good working condition. The identification and location of all
critical items in the network has been done and the planned maintenance schedule completed. It is
expected that additional capital expenditure in the foreseeable period will be limited to the provision
of effective cathodic protection for key bulk lines, as well as for the alleviation of ‘bottleneck’ flow
restrictions in certain networks.

Operations and Maintenance of Bulk Potable Water Supply Infrastructure

Classes of Water Treatment Works


The 10 water treatment plants and their distribution networks have been classified in terms of regulation
R2845 of the Government Gazette, 27 December 1985. Water treatment works currently categorised as
Class A are Laing, Nahoon and Class B Peddie, Binfield, Sandile while Class C water treatment works are
Debe, Masincedane, Glenmore and Mnyameni have been evaluated under the same regulations and are
listed as Class D water treatment works.

The classification of the Albany RO Plant is Class C at present. The Rooikrantz Plant was partly
decommissioned and form part of the Kei Road Water Treatment Works.
57

Operators
It is the water board’s practice to ensure that all facilities are operated by suitably qualified personnel
in line with draft regulation 17. In order to meet future needs of operating personnel, the board continues
to train operators who are recruited from communities within its operational area. To date, Amatola
Water has produced plant operators through its annual learnership programme who have achieved
the level N3 in Water and Wastewater Treatment. The training programmes are the combination of on-
job-training and the study of theory courses at the Buffalo City Further Education and Training College.
Amatola Water has been able to employ most of the learners once they have completed their training.

Radio Telemetry and Scada


One of the enabling factors in operations management is the radio telemetry infrastructure that has been
installed over the formative years of the board. The SCADA (Systems Control and Data Acquisition) system
has been supplied by Adroit to provide operators with graphic and text interface in control rooms.

The SCADA system monitors Amatola Water’s bulk purified water reticulation. The reticulation system
consists of three large plants and four smaller plants, with the balance of the outstations being reservoirs
that require monitoring. The SCADA actively monitors plant operation and reservoir levels and reports
back via radio telemetry to a central station operating on Adroit . Remote stopping and starting of all
the ma jor pump stations is also possible via the telemetry system. Amatola Water seeks to extend the
utilization of the system to other corporate functions such as Planning and Development, Water Resource
Management and Finance with the aim to continue to improve the quality and reliability of service.

Meter Reading
Water meters are read on the 20th of the month and signed by the plant superintendents and senior
plant superintendents before they are forwarded to the debtors department for billing.

Maintenance
The Regional Engineering Manager leads a multi-disciplinary maintenance team comprising civil
maintenance, water meters, radio and telemetry, planned maintenance, pipelines, property services
as well as the electrical and mechanical maintenance sections. Owing to the relatively small size of
Amatola Water, the maintenance team is largely centralised at the Nahoon Regional Complex, with the
exception of the pipeline team which is based at the Laing Dam facility.

The asset maintenance strategy encompasses a hybrid of proactive and reactive maintenance
as guided by failure trends and analysis of the effects of failures. In revising maintenance plans the
maintenance planning team consults with supervisors and artisans to ensure maximum effectiveness.
Most of the maintenance work is done in-house, while more specialised refurbishment and installations
are outsourced. The planned maintenance schedule and the dedicated resources for the entire pipeline
network are in place and is in the process of being systematically implemented. Amatola Water is
confident that this will further reduce the number of pipeline breakages and bursts and consequently
the distribution network water losses will be significantly reduced. The asset maintenance strategy is
thus aligned to ensure that service delivery is optimized in terms of efficiency and effectiveness.
58

A BAAN Enterprise Resource Package (ERP) is used across all functions of Amatola Water, including asset
maintenance. The computerised maintenance management system (CMMS) inclusive of responsibilities
is currently being refined to generate reports that provide information on key performance areas of
the corporate scorecard. Consequently, asset maintenance performance management reports are
generated to monitor performance in the targeted and key performance areas of the asset maintenance.
Furthermore, all emergency deviation requests will be channeled through the Control Room which is
equipped with qualified and technically skilled staff, appropriate equipment and technology (BAAN
and SCADA). This is to improve the response times, quality of service and accuracy of information on
breakdowns, emergency work, repairs and general maintenance.

Significant Future Changes in Operations and Maintenance Arrangements


Amatola Water has adopted a new strategy where the organisational focus will be concentrated on
growing its section 29 business. This strategy will see Amatola Water growing the section 29 business
from the current 85 to 150 Mℓ/day production therefore the operation and maintenance will be designed
to support this strategy and this will see our secondary business reduce to 30% in relation to 70%
primary.

International Standards Organisation (ISO) System


Amatola Water has embarked on using ISO Systems (ISO 9001, 14001, 17025 and OHSAS 18001) within the
entire organisation. A roll out program for the full implementation of this ISO System and accreditation
will be conducted in phases beginning with OSHAS 18001.

During the current financial year, Amatola Water has been successful in retaining accreditation for
OSHAS 18001. Amatola Water are currently embarking on programme to maintain its OSHAS 18001
accreditation with SABS.

Section 30 Business
Amatola Water is engaged in various section 30 business activities related to bulk potable water.
Current clients include the Amatole District Municipality, the Makana Municipality, OR Tambo District
Municipality and the National Department of Public Works.

Amatole District Municipality


Amatola Water has been over the past year, as part of the 3-year Bulk Water Service Provision Contract,
been operating the ADM bulk water services infrastructure since July 2009. This contract has been
extended with another 3 years ending 30 June 2014. The ADM has decided to undertake the reticulation
portion of the water service provision function itself. This contract is currently being phased out and some
Amatola Water staff has been employed by ADM for continuity. This will be concluded by 30 June 2014.
59

Amatola Water has


adopted a new
strategy where the
organisational focus
will be concentrated on
growing its Section
29 business.
60

National Department of Public Works


Amatola Water has signed an annually renewable Operation and Maintenance Agreement with the National
Department Public Works for the operations of their water treatment works at the following locations:

Treatment Works Process Mℓ/d


1. Slagboom WTW Pressure filter system 2
2. Fort Brown WTW Pressure filter system 0.26
3. Patensie WTW Pressure filter system 2.0
4. Kirkwood WTW Pressure filter system with lamina plates 1.8
5. Seafields SAPS Borehole System Borehole 0.03
6. Various small installations at other police
stations, prisons and military bases NA
Total 6.09

Table 18

Makana Local Municipality


Grahamstown is currently experiencing severe water supply challenges [water outages] emanating
from a range of challenges which include (a) institutional capacity and skills to manage the water
business (b) drought conditions that currently prevail and (c) old water pipelines and old absolute
electrical infrastructure and (d) demands that exceeds the current raw water supply.

The current water outages have caused ma jor frustrations to the extent that Rhodes University staff,
students and academics, lead a demonstration and handed a petition to the Municipal Manager on 14
August 2013. As students are linked to families all over SA, the frustration of this failure is felt by families
of students across South Africa.

Amatola Water is currently appointed by the Makana Local Municipality to operate and maintain the
Waainek, James Kleynhans, Riebeeck East and Alicedale water treatment works. This appointment
commenced in October 2013 and will continue until 2018

OR Tambo District Municipality


Amatola Water is currently managing 19 water treatment works under the five year Blue Drop
Management contract ending June 2018. This contract is mainly focusing on Blue Drop management of
the entire 19 ORTDM water treatment works, as the others interventions will be dealt with as projects.
61
Chapter 9

Bulk Wastewater Treatment and Disposals


Primary Business
Amatola Water owns one small 0.1Mℓ/day activated sludge pond system with a final evaporation pond
located at the Nahoon dam that is operated by the Primary Business Unit. The works is operated and
maintained appropriately to ensure compliance with the required discharge standards.

Secondary Business
The ma jority of waste water treatment work undertaken by Amatola Water to date is related to secondary
business. Amatola Water currently has the Amatole District Municipality and the Department of Public
Works as clients for this operation and maintenance service.

The goal of these contracts is continuous improvement of effluent quality and reliability for the works.
In this regard the organisation has a five year target of achieving an average of 70% effluent quality
compliance score for the waste water treatment works it operates. In terms of reliability the five year
target is to ensure that the service has a 90% availability. A key initiative in achieving this target is the
participation in the Department of Water Affairs Green Drop Certification Programme that promotes
excellence in water service provision.

Both District and Local municipalities have been made aware of the water board’s capabilities with
regard to provision of bulk waste water services. Amatola Water actively engages with the municipalities
on a regular basis to position Amatola Water as a potential provider for consideration in the future.

Amatole District Municipality


The water board is currently assisting the Amatole District Municipality (ADM) with management support
services in the local municipalities of Mbhashe, Mnquma, Great Kei, Amahlathi, Nkonkobe, Ngqushwa
and Nxuba. The contract ends in June 2014.

Included in this contract is the operation and maintenance of the following WWTW for the ADM:
62

Treatment Works Process Mℓ/d


1. Butterworth Biological Filtration 11.00
2. Fort Beaufort Activated Sludge Treatment 1.50
3. Komgha Activated Sludge Treatment 0.70
4. Bedford Oxidation Ponds 0.50
5. Adelaide Activated Sludge Treatment 0.74
6. Dutywa Oxidation Ponds 1.10
7. Kei Mouth Oxidation Ponds 0.685
8. Morgans Bay Transfer Pump Station
9. Cathcart Activated Sludge Treatment 0.70
10. Chinsta Oxidation Ponds 0.30
11. Peddie Activated Sludge Treatment 0.25
12. Seymour Activated Sludge Treatment 0.25
13. Keiskammahoek Activated Sludge Treatment 0.57
14. Middledrift Activated Sludge Treatment 0.25
15. Amabele Oxidation Ponds 0.06
16. Cwebe Oxidation Ponds
17. Mrhawulize Oxidation Ponds
18. Mendu Oxidation Ponds
19. Willowvale Oxidation Ponds
20. Elliotdale Oxidation Ponds
Total 18.605
Table 20

National Department of Public Works


Amatola Water has signed an annually renewable Operation and Maintenance Agreement with the National
Department Public Works for the operations of their waste water treatment works at the following locations:

Treatment Works Process Mℓ/d


1. Middleburg Agricultural College WWTW Biological Filtration 2
2. Middledrift Prison WWTW Oxidation Ponds 0.7
3. Healdtown SAPS WWTW Activated Sludge 0.2
4. Kwaai Brand Complex WWTW Activated Sludge 0.2
5. De Blaar Complex WWTW Bio Rotating Disk Treatment 0.2
6. Storms River WWTW Activated Sludge Treatment 0.3
7. Grahamstown SANDF WWTW Sewerage System 0.5
8. Patensie WWTW Biological Filtration 2.0
9. Kirkwood WWTW Biological Filtration 1.0
Total 5.3
Table 21
63
Chapter 10

Retail and Industrial Water


Retail Water Supply

Amatola Water participates on a very small scale as a retail water services provider within the Amathole
District Municipality in the Buffalo City, Ngqushwa and Nkonkobe Local Municipalities. This is included in
its primary business. No secondary business in the retail or industrial water supply spheres of the water
service provision function have been secured to date.

Industrial Water Supply

Water Service Authority Approvals


Amatola Water’s industrial clients and current demands are presented in Table 21:

No. Water Service Authority Local Municipality Industry Ave. Daily Demand Water Class
1. Amathole District Ngqushwa Fish River Sun 0.48Mℓ/ day Class 1
Municipality
2. Amathole District Ngqushwa Mpekweni Beach 0.11Mℓ/ day Class 1
Municipality Resort
3. Buffalo City Municipality Buffalo City Da Gama Textiles 3.39Mℓ/ day Class 1

Total Average Daily Industrial Demand 3.98Mℓ/ day

Table 21

The Amathole District Municipality and Buffalo City Municipality are aware of the supply of water to the
abovementioned industrial clients by Amatola Water.

Contractual Arrangements
Amatola Water has concluded water supply contracts with its industrial clients. The Amathole District
Municipality and Buffalo City Municipality have expressed no interest to date in taking responsibility for
the industrial supply contracts.

Institutional Arrangements
The current technical and financial institutional arrangements within Amatola Water cater for its
industrial clients due to the very limited number of this type of client.

Demand for Service


Amatola Water is not currently experiencing a demand for industrial water. Should this occur in the
future, Amatola Water will proactively engage with the relevant water service authority to ensure the
optimum solution to meeting the prospective clients’ water demand can be accommodated.
64
Chapter 11

Other Activities
Other Support Services

Procurement and Preferential Procurement

Procurement is now a full Supply Chain Management (SCM) Unit, combining both Procurement and logistics
unit. The SCM policy was approved in the 2012/13 financial year with daily implementation now taking place.

Supply Chain Management Alignment


The strategic purchasing objectives introduced include demand, acquisition and contracts management
activities such as cost and historical analyses, short term contracts and research into the acquisition
of critical items, as well as ensuring effective contracts management. Key high value contracts such as
fleet, medical aid and insurance are being researched to determine more suitable alternatives to the
business of Amatola Water.

Construction procurement guidelines have been implemented as prescribed by the Construction


Industry Development Board (CIDB). The construction procurement processes will be aligned on a much
larger scale in the coming year. All SCM officials will attend CIDB training from time to time to familiarize
themselves with changes that might take place.

The implementation of the SCM policy over the current financial year has highlighted the urgency to
align the existing SCM staff roles with the policy. A capability assessment has been conducted and was
followed by a proposed SCM unit organogram. Existing staff will be retrained and placed in the structure.
New staff will be recruited where gaps remain.

Supplier performance is monitored to ensure quality of service through a Supplier Performance


Management system. A review of the format of data on the ERP system is also being undertaken in order
to ensure accurate information for reporting purposes. Supplier performance results intend to serve as
a platform from which vendors will receive recognition for their performance going forward. This is the
ongoing process.

Strategies for critical goods and services have been identified and implemented such as the
regionalization of the engineering maintenance contracts. This ensures the availability of services, and
the tightening up on control measures through service level agreements. Certain contracts established
also allow opportunities for the emerging micro enterprise in line with preferential procurement goals.
Opportunities for improved services are explored on a continuous basis.
65

An efficient and effective vendor database has been maintained within the past year and has pre-
empted operational expansion by equipping itself with new suppliers, regionalization of supplier data,
synchronizing with the CIDB database, BBBEE status updates and a database cleansing exercise all to
ensure integrity of information. Procurement has become responsive and proactive in managing supply
and demand ensuring adequate information flow for reporting purposes. As part of this process and to
ensure quick service turnaround times, the procurement section maintains a flexible and responsive
attitude towards servicing its customers and clients and will continue to decentralize geographically
within various areas to support operational workflow.

Preferential Procurement
Amatola Water makes use of the BBBEE procurement recognition levels and goals as contained within
the Codes of Good Practice.

Definite goals to be achieved are pursued annually and preferences are targeted with each purchase
where possible, taking into account the needs of the business. Preferential procurement targets have
been included in the Supply Chain Management policy and the organisation endeavours to engage with
Level 4 or higher rated BBBEE contributors.

Detailed reporting in terms of preferential procurement performance on specific projects is done. The
results are used to identify poorly performing areas and to focus on increasing such levels. Results have
also become significant to clients who are now able to report on the level of business that has been
awarded to previously disadvantaged companies.

Two months after the approval of budget, SCM will produce a procurement plan for the entire Amatola
water with a target of 20% savings on goods and services against the budgeted amount.
The BBBEE targets will be set up front for each business case produced.

SMME Development
Amatola Water has established a SMME Development policy to formalize its commitment to small
business development. A full time development facilitator facilitates the various activities associated
with developing suppliers such as supplier education and information sessions. The focus is targeted on
increasing the capacity of suppliers on the database and also the development of skills within critical
supply areas in order to provide more opportunities and experience to small business and thereby grow
a sustainable base of suppliers. The focus of attention has shifted towards certain sectors where there
are few suppliers and barriers to entry are vast.

This unit within supply chain is also responsible for setting up the panel of pre approved service providers
and maintain the lisT.
66

Logistics

Stores
Amatola Water operates three other main stores at Nahoon Dam and Laing Dam. The store at Nahoon
Dam keeps certain emergency stocks of chemicals and a wide variety of smaller items and consumables
that are either required on short-notice or more convenient to have on site. The Laing Store supports
holds pipes, couplings and related items to support the pipeline teams based at Laing and Sterkspruit
respectively. The overall stock-holding value and quantity remains low with the focus on only holding the
necessary minimum stocks. The remainder of items is obtained directly from suppliers, who also hold
critical stock in certain cases depending on the nature of the item and their contract with Amatola Water.

Various chemical stocks is also held at the relevant works in a combination of consignment stock from
the supplier and Amatola Water owned stock.

Smaller offline stores of engineering spares are also in place at and Butterworth. These hold stock
for quick access of key critical spares used in the greater area. In the year coming forward similar
arrangements are to be rolled out in Albany Coast and Mthatha as well.

Fleet
With the geographically spread out nature of Amatola Water a reliable fleet of vehicle is crucial for
Operations to be able to consistently deliver on their mandate. As such, ensuring the reliability of the fleet,
with minimum downtime on vehicles continues to be an area of focus and continuous improvement. This
includes reducing turnaround times on repairs, accident claims and streamlining the service process.

Good governance of the fleet is also paramount, highlighted further by the costs of running such as
fleet and the ease of abuse if proper controls are not put in place. This starts with regular inspection
of the vehicles and ensuring the good general care and condition of the vehicle. Detailed analysis
of fuel consumptions is done monthly with any ma jor abnormally in usage reported immediately for
further investigation. The vehicles are also fitted with a vehicle tracking system which provides details
of the locations and use of the vehicles to allow supervisors to monitor the usage. The tracking system
also monitors green zone driving by drivers, which equates to encouraging drivers to drive at the
correct speeds, breaking and revving to ensure safe and economical driving. Vehicle accidents are all
investigated in turn and as appropriate action put in place to reduce the chances or re-occurrences. In
certain cases the vehicle tracking system assists with these investigations.

The fleet has continued to consistently in-line with the growth in the organisations operations with 132
standard vehicles, 9 trucks, 1 bus and 34 trailers and alternate vehicles totalling 176. The ma jority of
these vehicles are 4X4 single cab bakkies. Many of the vehciles are on a Full Maintenance Leases basis
and where economically appropriate Amatola Water owns the vehicles. This approach has continued to
prove beneficial by providing better pricing through having larger buying power, better turnaround times
on vehicle maintenance, smooth cash flow management and better overall reporting on fleet activities.
67

The Fleet section continues to monitor the progress of Administrative Adjudication of Road Traffic
Offences (AARTO) legislation and has made various preparations for the implementation of this
legislation. Once the final dates of the roll-out are released Amatola Water will be well positioned to put
in place the required processes.

Government garage has been approached analyzing the possibility of sourcing all the fleet from the
G-fleet. The possibility agreement has been reached however Amatola Water has to produce and detail
specification for fleet of which G-Fleet is voluntarily assisting in that regards. Upon finalization of the
new fleet specification, market and industry analysis will have to follow business case which will be the
determining factor for the method, then embark to official acquisition following the SCM policy.

Information and Communication Technology

Information and Communication Technology (ICT) supports and assists the corporate strategy by
making use of appropriate ICT technology.

ICT Governance
Overseeing ICT investments, risk and the allocation of related resources in Amatola Water is the
Information and Communication Technology Steering Committee which includes all senior management.
The review of the Terms Reference for this Committee to be in line with the Corporate Governance of ICT
Policy Framework (CGICT) is underway.

Amatola Water will adopt the Corporate Governance of ICT Policy Framework (CGICT) as its ICT Framework.
Also in the 2014/2015 reporting year, Amatola Water will develop and adopt a 5 year ICT Strategic Plan.

Infrastructure
Amatola Water operates a wide area network (WAN), connecting to the main operating schemes using
a combination of radio frequency links and Telkom lines as appropriate. Future plans for Amatola Water
WAN are to steadily grow the network to include all earmarked primary sites as well as to upgrade
existing infrastructure which will improve network performance and accessibility.

Disaster Recovery and Business Continuity remain key initiatives and there are ongoing plans in place to
provide additional systems / procedures and enhance current techniques in accordance with Corporate
Governance. To guarantee business continuity, Amatola Water is in the process of implementing an
offsite backup solution for disaster recovery into the cloud. This solution uses the internet as a means
for outsourced offsite data storage which is the current ICT trend.

To further facilitate business continuity, Amatola Water has initiated the process of procuring a generator
which will sustain client access to the servers and network during planned /unplanned power outages.
To align Amatola Water’s server room environment and controls to industry standards, certain criteria
68

will be introduced. These will include amongst others:


• a more efficient Access Control System to improve security,
• an Environmental Monitoring System,
• improved Fire Suppressant System, etc.

Measures are constantly reviewed to ensure that data remains secure via firewalls and perimeter
security. This is all managed and monitored by an industry leading service provider. Virus, malware and
related unauthorized access and software measures are in place, which continue to be highly successful.
Software Development

A combination of in-house and outsourced expertise are used to effect delivery of customized systems
solutions which facilitates the operational requirements of the organisation. Outsourced expertise is only
required for specialist applications / systems (namely the ERP system and LIMS) where configurations
/ development cannot be done in-house.

New systems required by the business are developed (as a standard) in the .Net framework, interfacing
with a Microsoft SQL database.

Future projects planned, which are aligned with the company’s strategic goals are:

• A Document Management System to improve and enhance document versioning and provide a
more efficient electronic central repository for user access.
• The ongoing enhancements of the Operations Efficiency System which currently assists the
Operations Department with reporting requirements as well as identifying problem areas as they
arise within Amatola Water’s network.
• On-going enhancement of the organisations Enterprise Resource Planning System (ERP) to
effectively report off business information required by stakeholders etc. are undertaken regularly to
ensure that information is accessed quickly and new methods of enhancing end user experiences
are implemented when required.
• Configure additional functionality within LIMS which will assist the laboratory’s effectiveness.
• The Integrated Management System is enhanced regularly to ensure that it aligns itself with new
requirements needed to maintain compliance with Safety and Quality measures.
• On-going improvements are planned for the Budget Management System which was first launched
in 2012. This system effectively ensures that all information is stored in a central location thus
preventing out dated documents from being utilised. It also assists Finance and Cost Centre
managers to report off of historical information should the need arise.
• Database web-hosting to facilitate remote access to systems, which will entail modification of current
systems to encompass this change.
69

Corporate Head Office

Amatola Water’s Head Office space has been fully allocated. Amatola Water has purchased a house
adjacent its current Head Office to renovate into additional office space. This has been rezoned for
business purposes and will be refurbished in the 2014/15 financial year to provide additional office space
for Head Office staff. Long-term options include relocating Head Office to Nahoon Dam depending on
operational requirements.

Social Responsibility

The provision of sufficient and safe supplies of water to the various communities in our area of operation
ranks as Amatola Water’s principal and most effective avenue of corporate social investment.

This stance is founded on the understanding that, an improvement in water services provision is a vital
enabler of broader local, regional and national socio-economic development and advancement.

Guided by this prioritization of services provision, Amatola Water seeks, by all practical means, to
contribute positively to the well-being of the communities in which it operates. In this regard, Amatola
Water channels its social investing efforts into areas where it can deploy its internal resources and facilities
effectively by collaborating together with community stakeholders in securing maximum social benefit.

Drop of Hope
Under the “Drop of Hope” initiative, Amatola Water aspires to bring a drop of hope to the many
communities in its area of operation that are in need of assistance, hence contributing to the upliftment
of these communities.

Through the programme, the organisation endeavours to entrench a passion to help, have fun and make
a difference. Amatola Water employees are encouraged to get involved in the communities, to put their
skills to good use and do something meaningful for the respective communities through the following
initiatives:

• Community outreach
• Fundraising
• Awareness/ Educational

Each year, a specific theme that is aligned with the Amatola Water corporate strategy is selected and
all the projects supported are required to fit within that specific theme.
70

The Drop of Hope programme is designed to bring about some positive spin-offs for Amatola Water.
These include:
• raising the utility’s profile both internally and externally
• creating an broader awareness about our business
• positioning the brand at the apex of organisations with regard to provincial water services
• a renewed sense of team-spirit in the organisation
• an increasingly socially empathetic workforce.

Educational Tours
Educational tours are part of the organisation’s community outreach initiative. Approximately 500
learners and students from various local schools and tertiary institutions are hosted annually at the
various Amatola Water schemes. Emphasis is placed on encouraging participants to seek careers in the
water sector while promoting broader awareness about water and environmental related issues.

Bottled Water
Amatola Water continues to demonstrate its commitment for community upliftment by sponsoring
branded bottled water in support of various community, educational and sporting programmes.

Scientific Services

Amatola Water has a laboratory located at Nahoon Dam. Sampling and analysis services for raw water,
potable water and waste water effluent are offered from this facility. The organisation also runs a satellite
laboratory service under contract to the Joe Gqabi District Municipality in the town of Barkley East.

The Scientific Services is responsible for monitoring the water quality in the organisation for
compliance to the potable water standard (SANS 241), the general waste water limits , the Blue
drop and Green drop standards as required by DWA . Analysis is done in the laboratory that is
based at Nahoon Dam. The laboratory now consists of a newly renovated Microbiology laboratory and is
currently validating the methods. It makes use of the LIMS for its day to day activities which improves
traceability of its results,ensure an audit trail and security of the data produced.

The key initiative over the next five year period is for the laboratory at Nahoon Dam to achieve ISO 1702
accreditation. A submission to the South African National Accreditation System (SANAS) will be made in the
2013/14 financial year for the some of the metals, anions and physical parameters it performs (10 methods).
An accreditation application for a further 7 methods will be submitted in the 2014/15 financial year.

Stakeholder Management

Amatola Water realizes that in order to improve access to water, particularly in the marginalized rural
communities in the periphery of the Province, a more integrated and collaborative approach needs to
be adopted in order to manage its engagement with its stakeholders.
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Maintaining an active and constructive dialogue with stakeholders ensures that the organisation’s
strategy is aligned to the needs of the communities it serves, aiding it to anticipate risks and prospective
opportunities, while also creating a conducive environment for it to achieve it mandate.

In this regard, the organisation has developed a Stakeholder Relationship Management Framework as
part of its concerted efforts to improve stakeholder sentiment, restore stakeholder confidence and to
ensure the effective and efficient profiling of Amatola Water and its deliverables in the Province.

Importantly, the framework is aimed at guiding the organisation in its quest for a high-quality and
coherent stakeholder participation and engagement programme.

Through the Stakeholder Relationship Management Framework and the accompanying Implementation
Plan, Amatola Water hopes to mobilize resources and form strengthened strategic inter-governmental
partnerships which will ensure coordination of service delivery by bringing together the various/ relevant
groups of stakeholders.

Amatola Water stakeholders are classified into three categories comprising statutory, contracted and
non-contracted stakeholders. Among these are Water Services Authorities, the Department of Water
Affairs, the media, suppliers, employees and various water sector partners.

The establishment of different forums and Amatola Water’s participation therein at national, provincial
and local levels in an effort to improve cooperation in delivering services to the Province’s rural
communities is an intrinsic element of the plan.

Looking ahead, the organisation believes that these engagements, if executed effectively, can deliver
strong outcomes for Amatola Water, way beyond what it can achieve in isolation.

Research

Amatola Water has signed Memorandums of Agreement (MOU’s) with the Fort Hare and Rhodes
Universities for the purpose of research collaboration. The MOU with Rhodes University has resulted in
the collaboration on two research projects to date. The first project is the application of water accounting
techniques in the international water sector and the Monash University of Australia is the lead entity on
this project. Rhodes University and Amatola Water are participating in the South African chapter of the
final document. The final report was completed in August 2010.

Amatola Water, Rhodes University and Bloem Water were allocated funding from the Water Research
Commission to study the impact of climate change on medium sized water boards in South Africa. The
project was completed in March 2013.
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Further funding has been requested for the next phase to consider the impact of climate change on
water quality within the study area. This is in alignment with the organisations strategy to increase
participation in research activities over the next five year period.

Secondary Business Activities

Amatola Water offers separate primary and secondary business services. Primary business centers
on services provided through infrastructure owned by Amatola Water or through Right of Use (ROU)
contracts. Secondary business activities include all other infrastructure related income generating
activities that include operation and maintenance contracts, project implementing agent services,
institutional and social development services, infrastructure planning and design services.

Amatola Waters limited primary business base has forced the organisation to aggressively pursue
secondary business opportunities over the past 5 years. The secondary business opportunities have
generally been short term in duration with less predictable cash flows and higher risk profiles. The
Board has taken the strategic position of stabilizing the business over the next five years through the
shifting of emphasis away from secondary business to growing the primary business. This is shift will
align the organisation’s primary business with the National Development Plan vision of providing each
household with running water and improving rural livelihoods.

The five year target set by the Board is to achieve a 75/25 split between primary and secondary business
revenue. This will be achieved in the primary business by expanding current bulk water infrastructure
capacity and through the securing of long term ROU contracts with strategic customers. It is envisaged
that these interventions will result in daily bulk potable water sold increase from the present 85Mℓ/day
to an estimated 150Mℓ/day within five years.

Primary infrastructure capacity will be increased at the Sandile, Peddie, Binfield, Nahoon, Masincedane
and Debe bulk water supply schemes over the next three financial years by a total of 42Mℓ/day. ROU
contracts will be sought in the Chris Hani, Joe Gqabi, Amathole and O.R. Tambo District Municipalities.
Alternative ROU contract options with other water service authorities (WSA) in the Eastern Cape
Province may also be considered where the cost benefit analysis yields real value for Amatola Water
and the WSA.

Secondary business activities will continue over the five year planning horizon. It is envisaged that the
approximate current secondary business rand value will remain constant over this period. Emphasis
will be placed on regional infrastructure planning, infrastructure development and specialist services.
Operation and maintenance contracts will be replaced over this period with ROU contracts.
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Current Secondary Business Contractual Arrangements

Amatola Water undertakes numerous secondary activities within the water sector. All activities are
formalized contractually via a service level agreement or a formal contract document. Amatola Water’s
current contractual arrangements linked to secondary activities are presented in Table 22. Alignment
with the Department of Water Affairs Ministerial Outcomes and Strategic Objectives are indicated.

The organisation has considered the secondary business workload as per the table below and has
committed to securing additional contractual resources to ensure the projects are implemented
efficiently and effectively in the coming three financial years.

Strategic Alignment
Client Project Government DWA Strategic Budget for Budget for Budget for
Outcomes Objective 14/15 15/16 16/17
PRODUCT - O&M CONTRACTS

Water Service
Makana O&M 9 1.6 R15 358 445 R16 233 876 R17 159 207

O.R. Tambo
District Maintenance
Municipality Support 9 1.6 R 14 800 000 R0 R0

Department
of Public Water Service
Works O&M 9 1.6 R 18 000 000 R0 R0
Sub Total R48 158 445 R 16 233 876 R 17 159 207

PRODUCT - PIA

Rapid Response
DWA 9 1.6 R 7 800 000 R0 R0
Unit

Joe Qgabi Sterkspruit


District WTW
Municipality Upgrade 6 2.1 R 30 000 000 R35 793 876 R0

KSD
O.R. Tambo Presidential
District Intervention
Municipality Project 6 2.1 R 280 000 000 R 315 000 000 R300 000 000

Sundays
River Valley Paterson Bulk
Municipality Supply 6 2.1 R 7 000 000 R0 R0

Ndlambe Bulk Water R 220 000


Municipality Supply 6 2.1 R 113 464 000 R 80 000 000 000

O.R. Tambo
District MWIG
Municipality Program 6 2.1 R89 442 000 R124 303 000 R175 675 000
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Strategic Alignment
Client Project Government DWA Strategic Budget for Budget for Budget for
Outcomes Objective 14/15 15/16 16/17

O.R. Tambo
District Sidwadweni
Municipality Water Supply 6 2.1 R 80 000 000 R0 R0

O.R. Tambo
District Coffee Bay
Municipality Water Supply 6 2.1 R 108 000 000 R 94 000 000 R0

Sub Total R 715 706 000 R 649 096 876 R 695 675 000
PRODUCT - PLANNING & DESIGN

Misgund
Water Supply
Koukamma Feasibility
Municipality Study 6 2.4 R 1 040 000 R0 R0
Kirkwood
Sundays Water Supply
River Valley Feasibility
Municipality Study 6 2.4 R 640 000 R0 R0
Nahoon Dam
Amatola East Coast
Water / BCMM Supply 6 2.4 R0 R0 R50 000 000
Jansenville
Water Supply
Ikwezi Feasibility
Municipality Study 6 2.4 R 1 200 000 R0 R0

Sub Total R 2 880 000 R0 R 50 000 000

Annual Totals R 766 744 445 R 665 330 752 R 762 834 207

MTEF Total R 2 194 909 404

Table 22

Table 23 clearly indicates the substantial need for secondary water services in the Eastern Cape Province.
This business is inherently short term but will continue to be utilised by Amatola Water to develop
relationships with the water service authorities. These relationships will be used as the foundation to
develop longer term ROU arrangements with the authorities.

Secondary business activities also strongly support the Ministerial Outcomes and Strategic Objectives
of DWA as detailed in the Share Holders Compact.
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Chapter 12

Human Resource Development Plans


The Human Resources Department coordinates the flow of people into, through and out of the organisation.
Human Resource (HR) initiatives support this flow of human capital, and are grouped into key functions
including, but not limited to: attraction, retention, capacity building and performance management. The
alignment and effectiveness of these functions ensures that Amatola Water has the right people in the
right positions at the right time. This in turn enables the organisation to deliver on its mandated services.

Human Capital
As an organisation, Amatola Water, has survived turbulent times and lost a number of key staff. The organisation
continues to face skills shortages but despite this challenge it has continued to deliver the required services.

Amatola Water maintains four divisions under the leadership of the Chief Executive Officer and the
Executive Team comprising of 4 Divisional Directors. This team is responsible for the implementation of
the organisation’s business plan.

The current workforce profile, according to the various Divisions is as follows:

Division % No.
Operations 73.4 251
Planning & Development 7.9 27
Finance 8.5 29
Corporate Services 6.7 23
CE’s Office 3.5 12
Total 100 342

Table 23: Divisional staff percentage: July 2013- March 2014

The staff turnover figures together with the reasons for termination for the period July 2013 – March
2014 are indicated in Table 24 below.

Termination Reason No. Labour Turnover Rate


Resignations 21 6.1
Dismissals 1 0.2
Retirement 5 1.5
Contract Expiry 0 0
Death 2 0.6
Total 29 8.4

Table 24: Service terminations: July 2013 – March 2014


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A Recruitment Plan for 2014/2015 will be developed to meet the demands of additional/new business
and in line with the approved budget for 2014/2015. Table 25 shows that thirty two (32) employees were
recruited in the 2013/14 financial year to date:

Placement No.
Permanent 18
Fixed term contracts 14
Total 32
Corporate Services 6.7
CE’s Office 3.5
Total 100

Table 25: New recruits July 2013 – March 2014

The organisation strives to continually assess present and future workforce needs and align these
with business objectives in an effective manner. Future recruitment practices will continue to focus on
the effective attraction, retention and engagement of staff with the necessary expertise, experience
and skills, within a framework that ensures equity and diversity. This approach is encapsulated in the
organisation’s Employment Equity Plan that is reviewed annually. The Board has set a minimum target
for the next five year period for management to ensure that 80% of critical posts are constantly filled.

Critical HR Interventions

The HR Department will continue to focus on internal service delivery, through the development and
implementation of strategies, initiatives and policies to enable the achievement of Amatola Water’s
corporate objectives. The approach of the Balanced Scorecard’s Learning and Growth focus area and the
envisaged inputs, activities and outputs will ensure that the following outcomes are progressively realised:

1. Improve Organisation Behaviour and its Functionality:


Future interventions:

•  Entrenching the appropriate corporate culture: inspirational leadership; managing


organisational politics; and effective conflict management.
• Aligning people, skills, systems, policies and procedures for strategy implementation.
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2. Ensure effective Organisation Planning, Design & Development


Future Interventions:

• Facilitate organisational development processes and focus on identified priority areas to


enhance the effectiveness of individuals, business units and the organisation as a whole.
• Align Amatola Water’s structure with the Business Strategy.
• Communicate and create awareness of the organisation’s structure.
• Communicate the vision, mission and corporate scorecard.
• Develop and implement an HR Strategy and Plan.

3. Ensuring the alignment of skills mix available to future requirements


Future interventions:

• Develop and implement an HR Strategy and Plan.

4. Ensure Effective Employment Practices & Personnel Administration


Future interventions:

• Ensure compliance to policy and implementation through effective communication and


monitoring.

5. Consolidate and implement a Reward Management Policy


Future interventions:

• Develop clear processes and procedures regarding reward management.


• Develop a realistic and user-friendly Remuneration Policy.
• Finalize the Performance Management Policy.

6. On-going consultation, participation & communication with Employees


Future interventions:

• Quarterly HR road shows and staff briefs to create an engaged workforce and enhance
cohesiveness.
• Schedule Team building activities.

The achievement of organisational corporate objectives will contribute towards ensuring that Amatola
Water has a skilled, competent, motivated and engaged workforce.
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HR Policy Development

The organisation has a comprehensive range of policies that focus on human resource attraction,
retention, development, performance management and as employee wellness. These policies are
reviewed every two years to ensure they remain relevant to the organisation’s business strategy and
add value to the brand in the labour market.

Critical outputs of these policies are Leadership and Employee Development. The policy framework is
dedicated to continual staff learning and improvement, the recruitment and retention of a workforce
that is competent, a motivated and adaptive workforce, staff health and safety, the retention and
sharing of institutional knowledge. The policy framework also provides opportunities for professional
and leadership development.

Remuneration

Amatola Water reviewed its Remuneration Policy in 2012 to ensure the organisation remunerates and
rewards its staff in a competitive manner. Progressive remuneration and rewards are however held in
line with the social and business imperatives of equity and cost effectiveness. In this regard the Board
has set modest year on year salary increase targets of CPI plus a nominal real percentage increase for
the next five year period. This is in line with the intent of the New Growth Path of National Government
with regards to salary increases.

The Board has resolved that the current Remuneration Policy be reviewed further to ensure the
organisations reward system is inclusive of non-monetary rewards. This will ensure the policy is holistic
and applicable to a broad range of circumstances.

Performance Management System

Individual staff performance contracts are aligned with the organisational objectives to ensure that
the strategies formulated by the Board and Senior Management are operationalized. Performance is
reviewed on a quarterly basis to ensure progress is monitored, challenges are identified and appropriate
solutions developed.

Divisional Business Plans are assessed quarterly by the Management Committee and senior managers.
This enables divisions to obtain objective reviews of progress in contributing towards the achievement
of the organisations corporate scorecard. The divisional scorecards are used to present progress reports
to the Board concerning the implementation of the corporate scorecard on a quarterly basis.

The Board has set average annual performance targets for the entity over the next five years. The
2014/15 financial year target is 75% achievement and escalates to 90% by the 2018/19 year.
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Employment Equity Profile

Amatola Water subscribes to the principles of employment equity and the staff profile as at 31 March
2014 is reflected in the following table :

Male Female Disability


Occupational levels Total
A C I W A C I W Male Female

Top Management 0 0 0 0 0 0 0 0 0 0 0
Senior
Management 2 0 0 1 1 0 0 0 0 0 4
Professionals &
Mid-Management 11 0 2 6 4 2 0 0 0 0 25
Skilled technical
workers & Junior
Manage 50 11 1 10 14 4 1 6 0 0 97

Semi- Skilled 106 6 0 3 40 4 0 4 2 0 163

Unskilled 48 0 0 0 5 0 0 0 2 0 53

Totals Permanent 217 17 3 20 64 10 1 10 4 0 342

Table: 26(a) Amatola Water Staff Profile

Amatola Water subscribes to the principles of employment equity and the staff profile as at 31 March
2014 is reflected in the following table :

Workforce Profile per Occupational Level and Economically Active Population

Blacks Female
Occupational Level AW EAP GAP AW EAP GAP

Top Management 0% 94.2% 94.2% 0% 46.2% 46.2%

Senior Management 75% 94.2% 19.2% 25% 46.2% 21.2%


Professionally Qualified
& Middle Management 76% 94.2% 18.2% 24% 46.2% 22.2%
Skilled Technical or
Junior Management 90% 94.2% 4.2% 25.7% 46.2% 20.5%

Semi-Skilled 98% 94.2% 0% 29.4% 46.2% 16.8%

Unskilled 100% 94.2% 0% 9.4% 46.2% 36.8%

Table: 26 (b) Gap analyses between EAP targets and Amatola Water workforce profile
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Amatola Water currently has 1% of its staff with disabilities out of the 342 staff complement.

It is recommended that if progress continues as depicted by the trends, equitable representation in terms
of gender can be reached by ensuring that the recruitment process, skills development initiatives and
succession plan are aligned with Amatola Water numerical goals within the next employment equity plan.

Employment Equity

The Employment Equity Plan of Amatola Water has been reviewed in November 2009 and is valid until
2014. The new business plan will require a review on employment equity plan with special focus on the
numerical goals which will cover the 2015-2020 period.

The reviewed Employment Equity Plan will be for the period 2015 – 2020. The reviewed plan is due for
approval by 31 November 2014.

The following represents Employment Equity developments within the organisation and highlights of future
tasks necessary to ensure that equity exists in all levels and categories of employment at Amatola Water:

• Increased employment of women, especially at management levels. Amatola Water makes


efforts to attract qualified and skilled women at these levels. Policies such as recruitment
procedures are some of the strategies adopted and implemented by the organisation to fulfill
this endeavour. Preferential recruitment is one other strategy employed to address these areas
of improvement and concern in reaching the numerical goals.
• Retention of employees’ strategies aimed at technical, scarce and critical skills of employees.
• Development of a Promotion Policy aligned to the organisation’s Succession Plan.
• Review of the Terms of Reference for the Employment Equity Committee.
• The alignment of training and development and the Succession Policy in ensuring effective
implementation of the EE Plan.
• Improve commitment from the management in ensuring the effective implementation process
of employment equity.
• Steadily stride in increasing the representation of people with disabilities from 1% in 2013 to 2%
in next five years as required by the Department of Labour.
• Commitment to align employment equity targets with BBBEE.

Training and Development

In response to the National Skills Development Strategy III (2011-2016), Amatola Water will develop a five
year training and development framework. This is in line with the commitment to grow and strengthen
leadership capacity to sustain a high performing organisation.
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Amatola Water’s training priorities are dictated by its Workplace Skills Plan, which is the product of
a detailed performance development plan and a skills needs audit. In conjunction with the Energy &
Water SETA and the organisation’s own strategic plan, Amatola Water will maintain its focus on the
following training interventions:

• Technical Training i.e. Engineers, Technicians & Artisans


• ABET
• Supervisory/ Management & Executive Development Programmes
• Safety, Health & Environment
• Life Skills Training
• Induction
• Information Technology
• In-service training
• Learnerships in Water & Waste Water Purification
• Apprenticeships in the Engineering disciplines
• Multi-skilling, Coaching/Mentoring & Job rotation
• Financial Study Assistance : Scarce and Critical Skills
• Recognition of Prior Learning (RPL)
• Graduate Placement

Training and development endeavors by Amatola Water form part of the principles that guide the
approach adopted to ensure the success of the business strategy in supplying quality water. The
development and provision of competencies central to the achievement of the business goals remains a
priority for Amatola Water’s strategic role.

Personal development plans (PDPs) are annually developed to assess employee’s interest in management
and professional advancement, and to help in career planning. Linkage between the organisational
framework and the individual will be detailed in each employee’s PDP. The PDP is part of each employee’s
annual performance contract and is aligned with the organisation’s Skills Development Plan.

Learnership Programme: Water and Wastewater Purification


The Amatola Water Learnership programme forms part of a number of interrelated initiatives, which are
intended to ensure the success of Amatola Water as a business to provide water services of a world class
standard. Amatola Water has contracted 10 general workers on an in-house learnership programme (for
12 months) on Water and Wastewater Process Controller NQF Level 4; Water and Wastewater Treatment
(NQF Level 2) courses.

The development strategy has been underway for several years and is guided by the Skills Development
Committee. With a competency-based approach, Amatola Water aims to build a workforce through a
wide array of formal, informal and networking development opportunities for employees. Each year the
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organisation will offer opportunities for development to expand employee’s skills and knowledge. This is
expected to stimulate innovation and collaboration among employees in the work place.

Amatola Water together with the Department of Water Affairs signed a Memorandum of Understanding
for coaching and mentoring of 24 DWA employees in water service treatment. The duration of the
programme is three months and will be conducted at various sites. Amatola Water has trained 17
learners from the community of Shixini in Dutywa in a 12 month Water and Wastewater Treatment
learnership. The programme for Shixini learners is coming to term on 30 April 2014.

Learning Academy
Amatola Water has been awarded full accreditation by the Energy & Water SETA as a training provider
to facilitate Water & Wastewater Treatment Process Control Supervision at NQFL 2 & 4 as well as a Skills
Programme.

The success achieved in past learnership programmes and the full accreditation by the EWSETA has led
to Amatola Water seeking to establish a Learning Academy. The aim is to address high unemployment,
skills shortage, poverty and other related challenges, which require an integrated and holistic approach
to knowledge management and skills development, over and above programme level.

The project will initially cater for the critical skills issues within Amatola Water and for the skills challenges
that affect the South African water and sanitation sector, as well as on the continent. Looking ahead, the
focus will incorporate various other models that include technology development, research platforms and
the establishment of centers of competence and excellence. The programme will be launched in June 2014.

Phase 1 of the programme will target municipalities and other stakeholders committed to water service
delivery. The trainee target group will primarily be unemployed youth especially from the previously
disadvantaged, employees from strategic partners and municipal officials. The Academy will be able to
assist in combining certain courses required across municipal boundaries. This will promote cost savings
and enable trainees from different areas to exchange experiences.

Graduate Placement
Amatola Water will at all times strive to support students with options to maximize their learning and
personal growth in order to achieve their academic qualifications. The programme is a structured
opportunity for students to apply the knowledge and skills gained through the course of their studies in a
workplace context. It provides invaluable exposure to new and interesting career options, opportunities
for networking and the experience of supervision. The programme is assisting Amatola Water to create
a pool of employees to recruit from, especially with scarce and critical skills. The organisation recognizes
the need to expand its current employment profile and has committed itself to make internship and
placement opportunities available within workplaces.
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The Internship Programme is aimed at unemployed graduates wishing to gain practical workplace
experiential learning and theoretical learning which will be integrated to provide a solid foundation of
skills for employment opportunities. The programme will focus on the development of key skills needed
in support of operational requirements within the company.

Financial Study Assistance


Amatola Water strives to attract skilled and competent employees. It is committed to continuously
developing its qualified and skilled staff as part of the endeavors towards staff development and staff
retention. Continuous learning opportunities shall be provided to employees through accredited courses.
Executive dialogue sessions on current leadership topics will be regularly offered.

Financial Study Assistance: Scarce and Critical Skills


Amatola Water engages in the development of the scarce and critical skills by providing financial study
assistance to students who meet the determined criteria. This will assist the company to address the
scarce skills shortage by creating a pool of competent employees and non-employees for recruitment
purposes.

SUPERVISORY, MANAGEMENT AND SENIOR MANAGEMENT PROGRAMMES


These programmes provide skills necessary to enhance the efficiency and effectiveness supervisors,
administrative and operational staff. There is a focus on the development of middle managers and
professionals in support of succession planning. This will be done through identifying and accelerating the
development of high-performing employees who have the potential for leadership and other critical roles.

Support to Assist Staff to Register with Professional Bodies


A key initiative for professional and management development over the next five year period is to
increase the number of staff with professional registration. The organisation will embark upon assisting
the pool of qualified staff in the fields of engineering and science to register as candidates with
professional bodies.

The organisation will continue providing this programme, as it has helped supervisors and managers in
implementing their day to day activities and management of their subordinates.

Recognition of Prior Learning


When an individual believes that they have equivalent competencies to one or more of those delivered
by the trade which they wish to undergo, as a result of their previous learning experience (formal
or informal), the Recognition of Prior Learning becomes the assessment process required to provide
evidence of their competencies.

There is currently a strong pool of experienced Artisan Aids who have been providing support to qualified
Artisans for a number of years. The Human Resources Development Unit, working in conjunction with the
Operations Division has recognized a need to support these Artisan Aids through Recognition of Prior
84

Learning (RPL) until such time that they attain full trade certificates. The skills gaps have been identified
in the engineering fields, where artisan aids will be assisted and developed until they qualify. Amatola
Water has assessed 26 Artisan Aids in both the electrical and fitting fields.

The suggested intervention plan is based on the findings/recommendations by the training provider,
that these artisan aids over a period of 12 to 18 months must undergo a structured training programme
that covers the different required modules of that specific trade.

In the 2013/2014 financial year, four Plumbing candidates who have been assessed through recognition
of prior learning are due for placement for a Trade Test.

Training and Development Policy


The Training and Development Policy is intended to advance and complement all Human Resources
interventions relating to training and development of employees. The policy will be reviewed and the
intention is to have one training and development policy which will incorporate all HR intervention areas.

Amatola Water recognizes that the competence of its human capital is a critical factor for its current
and future progress, competitiveness and sustainability. It further recognises that in order to meet the
skills challenges in the organisation, it is strategically necessary to invest in the education, training and
skills development of its employees, especially with regards to scarce and critical skills. The policy also
intends to contribute meaningfully to human talent attraction and retention.

Dual Career Tracks will be explored as a way to retain and energize talented professionals who may
not have an interest in management roles. Dual career tracks provide more scope for management and
specialist development and progression. The organisation will examine best practices and effective
models in other organisations to determine the feasibility of this approach in the next five years.

Succession Plans will be implemented in all departments and to ensure a continuous flow of qualified
candidates to fill critical positions. Strategies include the development of internal talent pools, knowledge
transfer from current employees to successors, and recruitment of new professionals to fill gaps.

Employee Relations and Employee Wellness

Amatola Water values its employees as one of the key assets in pursuit of its business goals. With over
80% representation, the South African Municipal Workers Union remains the sole bargaining agent for
the purposes of collective bargaining. Through the Local Labour Forum, Amatola Water continues to
foster a culture of participation and consultation in all critical issues of the organisation.

The Organisational Rights Agreement signed between worker representatives and the employer remains
the guiding document for engagement and consultation. Amatola Water is also a role player in the
Amanzi Bargaining Council processes with other water utilities.
85

Employee Wellnes and Life-Style Management

Amatola Water places importance to compliance with the Occupational Health and Safety Act as a
way of ensuring a workforce that is safe from occupational injuries and diseases. To this end, in-house
occupational health services aimed at ensuring proper placement of employees as well as continuous
health monitoring and routine surveillance for the employees are in place.

Beyond occupational health and safety compliance, Amatola Water recognizes the importance of keeping
employees happier, healthier and more productive. To this end, regular wellness activities aimed at
educating and creating awareness to employees about healthy life-styles and general management of
personal health continues on a regular basis.

Through the services of contracted doctors Amatola Water’s chronic health care management program
remains a key factor in minimizing prolonged absences from work and ensuring that employees remain
healthy. Early diagnosis, identification of response plans and diseases management awareness is the
cornerstone of the programme.

Amatola Water subscribes to the Department of Health’s strategy of “Getting to zero: zero new HIV
infections. Zero discrimination. Zero AIDS- related deaths”. In collaboration with service providers in
the field of HIV and AIDS and our Peer Educators, the organisation continues to champion awareness
to employees with a view of ensuring good support and care both to affected and infected employees
and their families.

The general wellbeing of employees is also a key focus in the wellness programs. Programs aimed
at general health awareness as well as early identification and management of chronic conditions
like diabetes, TB, high blood pressure and obesity will be ongoing for the year ahead, as well as the
foreseeable future.
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Chapter 13

Environmental Management
Programme and Plans
The focus of the environmental management function is to ensure that both Amatola Water owned
(primary) business and secondary business (including right-of-use business) comply with environmental
and relevant water legislation, standards, regulations and norms.

Environmental management remains a complex and challenging concept based, in part, on the
complexities of the definition of environment. Based on the National Environmental Management Act (1998)
and the White Paper on which it is based, environment should be defined broadly and should promote
constitutional values, safeguard the health and well-being of people, advance economic development
and ensure that the required level of ecological protection is afforded without compromising the natural,
financial and social resource bases. The scope of environmental management continues to evolve, and is
merging with concepts of sustainability, triple bottom lines, corporate governance and corporate social
and environmental investment. With an ever increasing pressure on freshwater and other environmental
resources, there exists a large challenge to integrating social, economic and environmental factors in to
planning, implementing and decision-making so that resource development and use is able to serve both
current and future generations sustainably.

While Amatola Water has made significant inroads into the “people” aspect of the definition of environment
through the development and implementation of the Integrated Management System and associated
policies and procedures, much remains to be done regarding the “green” (or ecological) aspect of
the definition. In its Environmental Policy, implemented in November 2002, Amatola Water committed
itself to minimising the impact of its operations on the environment through the application of sound
environmental management based on best practice. The goals of the policy are to integrate environmental
considerations in the day to day business activities of the organisation and at the same time provide strong
community leadership on environmental issues as well as contribute to broader community understanding
of environmental issues. While many of these are focused towards issues pertaining to water, water
resources and water management, broader environmental issues are not excluded from the scope of the
policy. These goals were incorporated in the development of the Environmental Sustainability Strategy
and are being given effect through interventions and initiatives that are aligned with the organisational
scorecard and both short and long-term strategic objectives.

The strategic interventions outlined in the Environmental Sustainability Strategy provide the overarching
framework to guide Amatola Water in supporting and achieving environmental sustainability. Broadly, the
interventions have been identified as:
87

• monitor, assess and evaluate effect of, and on, Amatola Water activities through the development
of environmental monitoring programmes;
• manage and mitigate environmental impacts;
• promote environmental awareness, creating an awareness of scarce natural resources and the
need to reduce environmental stress;
• support co-operative governance;
• enhance organisational sustainability (social and financial) through environmental initiatives;
• participate in relevant environmental technology research.

Although aspects of these initiatives are currently being undertaken across the organisation, formalising
these interventions within the strategy provides stronger motivation and support for ensuring that
principles of environmental sustainability are clearly incorporated in the entire life-cycle value chain of
the organisation. A key driver in implementation of the strategy is to review the Integrated Management
System in order to fully integrate environmental sustainability and develop relevant environmental
management plans to monitor and assess organisational activities, and ensuring compliance with all
relevant legislation. This is particularly important as Amatola Water embarks on upgrading and expanding
production capacity at six water treatment works supplying various supply schemes.

In order to give effect to the Environmental Policy and Environmental Sustainability Strategy, Amatola
Water continues to work with relevant necessary National, Provincial and Local government as well as
seeking out other relevant organisations that are committed to ensuring a sustainable environment for
the future. These include ensuring ongoing relationships with existing research partners (e.g. tertiary
institutions) and monitoring partners (e.g. undertaking raw water monitoring on behalf of the Department
of Water Affairs, various municipalities and assisting the Working for Water programme in the control
of water hyacinth) and establishing new research partnerships. A number of environmental projects
underway provide necessary environmental support for various projects across the organisation both
for Amatola Water owned business (such as increasing WTW production capacity) as well as secondary
and right-of-use business. These provide good working examples of how to integrate environmental
issues comprehensively into future projects and serve to better position Amatola Water as a leader in
environmental sustainability in the region.

Environmental awareness and education campaigns have been identified as being able to effectively
reach communities, not only Amatola Water staff, to “think green as a routine”. This should affect the day
to day business of the organisation to ensuring that Amatola Water contributes to not only achieving
environmental sustainability but strives to become an environmental leader within the Eastern Cape. This
is not limited to education with regards to water but includes broader environmental issues in the region.

Key environmental initiatives aligned with the organisations 20 year goals and 5 year objectives are
presented in table 27:
88

20-Year Goals 5-Year Objectives Environmental Initiatives


• Blue drop: minimum score 90%. Increased customer base and Ensure environmental
penetration (delivery options / sustainability is incorporated in
• Blue and Green Drop services). planning and development for
achievement in entire projects from inception (EAs
service area. and WULs).

Achieve Statutory Quality Develop and implement


• Contribute towards decent
compliance at All AW Owned Environmental Management
standard of living of
and RoU plants. Plans.
communities in the EC.
Provide support to DWA and DEA.
Contribute to decent standard Ensure environmental
of living in support of rural sustainability is incorporated in
livelihoods. planning and development for
projects from inception.
Develop and implement
Environmental Management Plans.

Provide support to DWA and DEA.

Develop environmental
enhancement / mitigation
initiatives.

Provide services and invest in Ensure environmental sustainability


technologies / systems in an is incorporated in planning and
environmentally responsible development for projects from
and sustainable manner. inception (EAs and WULs).

Be aware of and participate in


relevant research projects (e.g.
WRC, tertiary institutions).

Investigate renewable energy


options.

Strengthen and deepen relationships Sustain existing and grow


with statutory, contracted and non- environmental network.
statutory stakeholders.

Ensure environmental sustainability


is incorporated in planning and
development for projects from
inception (EAs and WULs).
89

20-Year Goals 5-Year Objectives Environmental Initiatives


• 8
 0% of households in EC On-going strengthening of Balance Implement electricity
being served at 750ℓ/ Sheet to sustainable services consumption efficiency measures.
household/day. (Ratios).
Undertake environmental
• H
 ave a sustainable and footprint studies (e.g. carbon,
reliable infrastructure to water).
supply quality water for all.
WCDM plans.
• Increase sales volume by 20%
year-on-year to reach entire Implement water recycling at
province by 2020. WTW (where appropriate).

• Water loss – 6%. Adequate water security and Ensure environmental


assurance in support of water sustainability is incorporated in
• W
 ater provision at 750ℓ/ supply. planning and development for
household/day. projects from inception (EAs
and WULs).
• R
 educe environmental
footprint.

Upgrade plants to provide Ensure environmental


minimum 5 Mℓ/day. sustainability is incorporated in
planning and development for
projects from inception (EAs
and WULs).

Minimise production and WCDM plans.


distribution water losses.

Develop adequate systems, Undertake environmental


structures, policies and processes footprint studies (e.g. carbon,
to enable strategy implementation. water).

Integrate environmental
sustainability into existing IMS.

Develop and implement EMPs.

* R
 enowned knowledge hub for Improve organisational behaviour Develop environmental
water services in the EC. and its functionalit. awareness initiatives.

Ensure effective organisation Ensure environmental


planning, design & development. sustainability is incorporated in
planning and development for
projects from inception (EAs
and WULs).

Table 27
90
Chapter 14

Water Conservation and Demand


Management
Primary Business

Water Conservation and Demand Management Policy


Throughout its own internal operations the water board strives to reinforce principles of water conservation
covering all stages of the production chain. In water treatment works, water losses are minimized through
process improvement and optimization of backwashing and de-sludging processes, while measures are also
in place to ensure that other losses (such as leaks) are monitored and attended to without delay. Reclaiming
of water disposed of during the desludging process is also part of Amatola Water’s operating culture.

This emphasis on prudent water usage is also maintained externally through the limiting of wastage in
distribution and storage networks, where more detailed water balances are conducted on a monthly basis
to identify any anomalies. Water demand is managed with the aid of a comprehensive “parent – child”
metering system that is guided by a policy on meter calibration and maintenance.

Illegal connections pose a problem in some distribution networks. Amatola Water has a policy in place to
manage illegal connections and ensures that the local and district municipalities are informed throughout
all interventions approved in terms of the policy.

Institutional Arrangements
The maintenance and reading of all water meters is under the control of the Operations Division. All meter
readings are taken on a monthly basis and are used by the finance department to ensure all customers
receive an account for raw and or potable water used.
The Planning and Development Division is responsible for water loss and demand management monitoring
in the organsation. The separation of the operations and maintenance from the monitoring function
ensures accountability is not compromised.

Programme
Amatola Water compiles a water balance report on a monthly basis in terms of its metered water. From its
enterprise resource management programme (BAAN) reports it is possible to draw three-monthly consumption
reports that indicate specific areas of loss. Using this as a tool, it is possible for supervisors to trace specific
water loss areas quickly. Amatola Water achieved a 4.8% production loss and distribution loss 9.5% on average
for the previous financial year. Continued focus on reducing these losses will occur over the next five year period.
The organisation intends reducing total losses from the current 14.3% to 8% by minimizing illegal connections,
providing more rapid responses to leaks and the replacement of certain portions of its infrastructure that has
exceeded its design life. The water meter calibration programme also assists in curtailing demands.
91

During the drought period restrictions in supply, consumption and outputs are monitored on a daily basis
to ensure demands are limited to the levels as was set out in the Amatole Water Resources System analysis
operating rules. The status of the level of the dams will be monitored during May each year and the applicable
operating rules will then be applied depending on the projected annual demand and available resource.

Good progress has been made in the management of non-revenue water. This has been based on the
production of schematic lay-outs of meters on all schemes, showing the relative positions of the meters –
including both billing and balance meters. This enables Amatola Water to establish overall losses on each
scheme as well as losses at particular points in the schemes. Such losses can be due to real water loss or
apparent loss. Inaccurate meters or illegal connections are detected as apparent losses but by tracking
balances between sub-sections of schemes, suspect meters or areas with illegal connections can be isolated,
identified and appropriate corrective action can be taken. These schematics of meter line diagrams are
continuously updated when required by the GIS section in cooperation with the Operations Division.

Water balances are done on a monthly basis for all schemes operated by Amatola Water. These balances
are communicated between the various divisions to ensure that appropriate actions are taken to reduce
the losses identified. Amatola Water has also changed to an electronic meter reading recording and bar-
code identification system to ensure that less recording mistakes are made during the meter reading
process. The management of illegal connections is undertaken in consultation with clients by inviting
ward councilors to community meetings where particular problems are discussed and where a permanent
solution can be agreed to and implemented.

Projects

Amatola Water has planned several capital expenditure projects over the next five year period that
will result in improved water conservation and demand management. These projects focus on water
infrastructure operated by Amatola Water and include the following:

Scheme Project Budgets (Rx’000)


2014 / 15 2015 / 16 2016 / 17
Nahoon Replacing Rising Main Pipeline R 1,195 R65 R0
Laing Replace Ndevana Pipeline R3,000 R3,000 R3,000
Replace Raw Water Main R1,585 R770 R0
Peddie Upgrade Bulk Distribution R22,420 R1,120 R0
Binfield Upgrade Bulk Distribution R6,270 R43,217 R2,150
Sandile Upgrade Bulk Distribution R13,860 R138,550 R6,900
Masincedane Upgrade Bulk Distribution R7,080 R49,266 R2,450
Debe Upgrade Bulk Distribution R0 R8,260 R2,100
Totals R55,410 R244,248 R16,600

Table 29
92

Secondary Business

Water Demand Management services are also currently offered under the secondary business to
municipalities in the Eastern Cape Province. This service is currently being rendered in Kouga Municipality.

Kouga Municipality
Amatola Water was appointed by the Kouga Municipality to assist with a WCWDM intervention in January
2012. The project value was R 1,5 million and was funded by DWA. The focus of the project was meter
installation, meter calibration, a database review and valve maintenance. This first phase of this project
was successfully completed during 2012.

Amatola Water has obtained a further R1 million from DWA to assist Kouga Municipality further with
WCWDM during the 2013/2014 financial year (Phase2). Specific problematic pipelines, air valves, reservoir
control valves and scour valves were serviced and or replaced as well as an annual water balance been
drawn up. All work was completed during Phase 2 and it is planned to do a Phase 3 for continuity and to
achieve further improvements and savings. Amatola Water is however still waiting to get an allocation of
additional money from DWA for Phase 3.
93
Chapter 15

Financial Plan
The Financial Plan is for the five-year period (2014/15-2018/19). The following assumptions have been
made, and it must be noted that any material change in the assumptions will have an effect on the long-
term view expressed:

Macro Economic Assumptions ( Source Bureau for Economic Research (BER); National Treasury
and Investec)

Parameter Note F'13 (Baseline) F'14 F'15 F'16 F'17 F'18 F'19
CPI 5.3% 5.5% 5.6% 5.8% 5.6% 5.6% 5.6%
PPI 4.80% 5.30% 5.50% 5.70% 5.70% 5.70% 5.70%
Interest on borrowings
Short
term 7.16% 7.78% 8.21% 8.51% 8.51% 8.51% 8.51%
Long
term 10.87% 10.92% 10.99% 10.99% 10.99% 10.99% 10.99%
Interest on
Investments 5.16% 5.78% 6.21% 6.51% 6.51% 6.51% 6.51%
Employee Costs 7.90% 7.90% 7.70% 7.60% 7.60% 7.60% 7.60%
Number of
Employees 379 345 355 365 375 385 385
Elecricity Increase 8% 16% 16% 16% 16% 16% 16%
Chemicals 6.80% 7.20% 6.90% 6.90% 6.90% 6.90% 6.90%
Maintanance 6.80% 7.20% 6.90% 6.90% 6.90% 6.90% 6.90%
Raw Water
Purchase 8% 8% 8% 8% 8% 8% 8%
Water research Levy 1% 1% 1% 1% 1% 1% 1%
Business Model
( Engegement
in Secondary
Business) 49 45 40 37 33 30 30
Net Profit % 3 3 3.5 4 4.5 5 5

Table 29

The financial model has been developed using the 2011/12 audited and 2012/13 year to date data. The
capital expenditure programme is driven by the organisational strategic objective to make sure that
Amatola Water plants are producing at least 5Mℓ/day. This figure has been determined as the break-
even point for a viable water treatment plant in the Amatola Water context. Amatola Water has secured
94

funding of R500 million from the national fiscus over the next two years. This funding was sourced to
enable the organisation to become financially viable and self sustaining into the future. The funding will
be used for the organisation’s capital expenditure programme. The capital expenditure programme will
result in the organisation’s bulk potable water production and distribution infrastructure to increase
from the current 112Mℓ/day to 154.4 Mℓ/day. Amatola Water will contribute approximately R20 million
co-funding from its reserves to fund this capital expansion.

Amatola Water Board Financial Plan for 2014-2019

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5


Consolidated F14 F15 F16 F17 F18 F19
Assumptions

CPIx 5.5% 5.6% 5.8% 5.6% 5.6% 5.6%


Increase in water
sales (Percentage) 8.7% 1.0% 1.5% 20.0% 3.2% 3.1%

Volume of water
billed (Potable) 33 716 954 34 054 124 34 640 383 43 180 149 44 757 601 46 337 194
Volume of water
billed (Raw Water) 8 411 081 8 495 191 8 534 420 8 618 892 8 704 209 8 790 379
AW Volume Sold
(Inc ROU) 42 128 035 42 549 315 43 174 803 51 799 041 53 461 810 55 127 573

Right of use 0 2 799 122 8 945 024 10 049 312 13 477 818 14 286 487
Total Water Sold
(exc ROU) 42 128 035 42 549 315 43 174 803 51 799 041 53 461 810 55 127 573
Proposed tariff
increase %
(Potable) 9.8% 9.0% 9.0% 8.8% 8.8% 8.6%
Raw Water tariff
increase by DWA % 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%

Water Loss % 8.5% 8.5% 8.6% 7.3% 7.0% 6.6%

Volume raw water


purchases 46 060 075 46 520 675 47 220 231 55 873 534 57 492 877 59 006 131
Cashflow Budget

Revenue (Primary
Sec 29) 258 917 877 252 103 364 279 551 843 375 359 270 387 349 014 399 356 834

Potable 244 893 148 237 493 699 263 351 509 353 606 791 364 922 209 376 234 797

Raw 14 024 729 14 609 665 16 200 334 21 752 479 22 426 806 23 122 037
Less: Provision for
non-payment (@3-
5% of Sales) 7 767 536 7 563 101 11 182 074 11 260 778 11 620 470 11 980 705
Less: Raw water
cost 63 006 959 72 338 645 80 295 896 107 596 500 114 727 806 114 727 806
Less: Direct scheme
costs 95 557 908 99 093 551 104 840 977 125 712 071 130 506 220 130 506 220

Less: Overheads 56 046 680 58 067 614 66 533 023 71 723 683 70 301 604 70 301 604
95

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5


Consolidated F14 F15 F16 F17 F18 F19
Sub-balance
1: Operating
Cashflow surplus
or (loss) before
interest charges 36 538 794 15 040 454 16 699 874 59 066 238 60 192 914 71 840 499
Less: Net interest
charges -3 754 479 -4 475 760 -4 730 878 -5 000 538 -5 280 569 -5 576 280
Sub-balance
2: Operating
Cashflow surplus or
(loss) after interest
charges 40 293 272 19 516 214 21 430 752 64 066 776 65 473 482 77 416 779

Capital expenditure
comprising capital
expansion and
refurbishment 49 587 399 171 440 141 359 696 165 42 752 243 65 000 000 65 000 000
Changes in
working capital 40 577 689 20 079 349 22 738 769 84 105 133 81 189 529 70 374 558

Depreciation 17 655 600 18 644 314 19 725 684 25 643 390 27 079 419 28 595 867

Dividends 0 0 0 0 0 0
Sub-balance 3:
Net borrowing
requirements -67 527 416 -190 647 590 -380 729 866 -88 433 989 -107 795 466 -86 553 646
Accounting Surplus

Operating cashflow
or (loss) after
interest charges
(Sub-balance 2) 40 293 272 19 516 214 21 430 752 64 066 776 65 473 482 77 416 779

Depreciation 17 655 600 18 644 314 19 725 684 27 615 958 29 162 452 30 795 549
Sub-balance 4:
Accounting surplus
or loss 22 637 672 871 899 1 705 068 36 450 818 36 311 031 46 621 230
Other Revenue

Right of Use
(ROU)/Blue Drop
Advisory 0 28 676 541 30 311 104 32 038 837 33 833 012 35 727 661
Revenue
(Secondary Sec 30) 126 338 345 77 630 111 81 214 758 84 665 432 98 468 861 113 700 083

Sundry Revenue 5 353 107 2 736 000 2 891 952 3 056 793 3 196 183 3 341 929

Total Other 131 691 452 109 042 652 114 417 814 119 761 062 135 498 056 152 769 673

Total Revenue
(Sec 29$30) 390 609 329 361 146 016 393 969 657 495 120 332 522 847 071 552 126 507
Percentage of the
Secondary Business
to Total Revenue 48% 27% 26% 21% 23% 26%
Percentage of the
Primary business to
Total Revenue 52% 73% 74% 79% 77% 74%

Total Revenue
(Sec 29$30) 390 609 328.93 361 146 016.00 393 969 657.00 495 120 332.00 522 847 070.59 552 126 506.55

Table 30
96

The organisation’s continued balance sheet weakness necessitates that secondary business pursuits
continue for the interim period to build up equity. Long term sustainability will however be secured through
the improved economy of scale in the primary business once the abovementioned capital expenditure
programme has been implemented. The expected outcome of the capital expenditure programme is
increased production and sales of potable bulk water. Current production capacity on most plants is at or
over 100% indicating there is unmet demand on the organisation’s supply area at present.

Analysis of the Financial Forecast 2014/15-2018/19:

Positive Expectations
• Projected growth in operating primary revenue linked to inflation ;
• Projected growth in secondary revenue projects;
• Growth in costs in line with expected inflation rates;
• Growth in net surplus;
• Projected increase in reserves;
• Increase in the asset base;

Negative Expectations
• Decline in cash reserves in year 1 to 5 due primarily to the funding of capital expansion;
• Funding required to grow the bulk supply to ensure long term sustainability and asset replacement
reserves.

Major Costs Drivers

Ma jor cost drivers for Amatola Waters primary business includes raw water purchases, electricity,
chemicals and staff (overheads).

Our Ma jor Costs Drivers (K/ℓ) 1.55 1.70 1.93 2.00 1.94

Raw water cost 2.07 2.13 2.22 2.25 2.27


Direct scheme costs (Electricty and
Chemicals) 1.22 1.25 1.41 1.28 1.22

Overheads

Table 31
97

Ma jor Cost Drivers (k/ℓ)

6.00

5.00

4.00
Rand Values

3.00

2.00

1.00

-
1 2 3 4 5

Overheads 1.22 1.25 1.41 1.28 1.22


Direct scheme
costs 2.07 2.13 2.22 2.25 2.27
Raw water
cost 1.55 1.70 1.93 2.00 1.94

Figure 2

Raw and Potable Water Tariff

Amatola Water is estimating that the raw water tariff will increase at 8% over the next five years while
the potable water tariff is projected to increase at an average of 8.5% per annum. The potable water
tariff increase will be at a decreasing rate over the next five years to ensure tariffs are affordable and
sustainable. This will be achieved by increasing the production capacity of Amatola Water supply systems
resulting in increased potable water sales. This increased sales volume will improve the organisation’s
economy of scale resulting in a reduction in the cost per kilolitre because 40% of the plants costs are
fixed or semi-fixed. Below is the graphic representation of the relationship between raw and potable
tariff over the next five year period:
98

Tariffs

9.00

8.00

7.00

6.00
Rand Values

5.00

4.00

3.00

2.00

1.00

-
1 2 3 4 5
Proposed
sales tariff 6.97 7.60 8.19 8.15 8.12
Assumed raw
water tariff 1.55 1.70 1.93 2.00 1.94

Figure 3

Tariffs 1 2 3 4 5
Proposed Sales Tariff 6.97 7.60 8.19 8.15 8.12
Assumed Raw Water Tariff 1.55 1.70 1.93 2.00 1.94

Table 32

Profitability Over the Next Five Years


The financial model forecasts a low accounting surplus for year one. This is due to high plant costs
and low production volumes. The situation improves in year two after completion of the upgrade of
some of the Amatola Water treatment plants. Profitability starts to improve due to the sharp increase
in production volume versus a lower increase in costs due to fixed and semi-fixed costs remaining
relatively stable. Below is the graph showing this trend:
99

Profitability over the next five years (Primary Business)

Revenue
(Primary Sec 29) 252 103 363.68 279 551 842.99 375 359 270.33 387 349 014.50 399 356 833.95
Primary Business
Costs (Sec 29)
(Exc Interest) 251 231 464.19 277 846 774.92 336 935 883.67 348 954 951.45 350 535 921.68
Net Profit 871 899.49 1 705 068.08 38 423 386.66 38 394 063.05 48 820 912.27

Table 33

450 000

400 000

350 000
Rand Values

300 000

250000

200 000

150 000

100 000

50 000

-
1 2 3 4 5
Revenue
(Primary Sec 29) 252 103 363.68 279 551 842.99 375 359 270.33 387 349 014.50 399 356 833.95
Costs
(Primary
Business) (Exc
Support Service) 251 231 464.19 277 846 774.92 336 935 883.67 348 954 951.45 350 535 921.68
Net Profit 871 899.49 1 705 068.08 38 423 386.66 38 394 063.05 48 820 912.27

Note : this is just primary business

Figure 4
100

Right of Use Contracts

Amatola Water expects to conclude approximately five Right of Use (ROU) agreements with various
municipalities within Eastern Cape for the next five year period. These contracts are expected to
generate additional revenue of R10 million in year one to R80 million in year five. This revenue is included
in the core business revenue.

Secondary Business

Amatola Water’s strategic intent is to decrease focus on the secondary business segment due to its
contractual and therefore volatile nature over the long term. The current revenue ratio between the two
business segments is currently standing at 52/48 (52 % primary business and 48% secondary business).
Over the medium term the organisation intends to have a 70/30 ration between primary and secondary
business. Long term this ratio target will be 90/10. The annual revenue from secondary business is
currently R150 million and is expected to grow over the medium term to around R250 million. Below is
the summary of the data:

Section 30 Business

180 000.00

160 000.00

140 000.00
Rand Values

120 000.00

100 000.00

80 000.00

60 000.00

40 000.00

20 000.00

-
1 2 3 4 5
Revenue
(Secondary Sec 30) 109 042 652.32 114 417 814.01 119 761 061.67 135 498 056.09 135 498 056.09
Total Costs 107 267 868.91 111 145 316.64 119 101 779.57 127 799 296.44 127 799 296.44
Average Net
Profit ( 5%) 1 774 783.41 3 272 497.37 659 282.10 7 698 759.66 7 698 759.66

Figure 5
101

Section 30 ( Secondary Business)

Revenue
(Secondary Sec 30) 109 042 652.32 114 417 814.01 119 761 061.67 135 498 056.09 135 498 056.09
Total Costs 107 267 868.91 111 145 316.64 119 101 779.57 127 799 296.44 127 799 296.44
Average Net Profit
(5%) 1 774 783.41 3 272 497.37 659 282.10 7 698 759.66 7 698 759.66

Table 34

During the 2013/14 financial year Amatola Water changed its accounting treatment for contracts where
it is employed as an implementing agent. A view has been taken that the only portion to be reflected
in the statement of financial performance is the implement agent fee not the gross amounts. This is
because Amatola Water is the “agent” in these contracts and not “principal” client.

Capital Expenditures and Funding

For the next 5 years the lack of strength of the balance sheet will not allow the organisation to access
capital markets. Amatola Water will therefore rely on grant and internal funding to fund capital
expenditure programmes. Over and above this the organisation will seek credit accreditation/rating
agency views of the financial status of Amatola Water. This will facilitate and understanding of the gaps
that Amatola Water will still need to address before a favorable rating can be attained that will enhance
the ability to access capital markets in the future. Amatola Water has already started to engage National
Treasury about obtaining the borrowing limit in this regard. These two projects are critical and the aim
is to finalize them by the end of the 2014/15 financial year.

Amatola Water views accessing the capital market as ma jor development in ensuring its sustainability as
Sec 3(b) entity and in the positioning as the key role player in provision of water services in the province.

The proposed 5 year capital expenditure programme for Amatola Water with the various intended
sources of funding is presented in the following table:

Capital Expenditure Funding

Net borrowing -190 647 590.34 -380 729 866.17 -88 433 988.89 -107 795 465.66 -86 553 645.53
requirements
Grant Funding 148 147 841.26 335 061 351.09 16 697 500.00 8 000 000.00 6 000 000.00
Loans (Capital 5 000 000.00 5 000 000.00
Market)
Remaining (42 499 749.08) (45 668 515.08) (71 736 488.89) (94 795 465.66) (75 553 645.53)
requirement
Internal (42 499 749.08) (45 668 515.08) (71 736 488.89) (94 795 465.66) (75 553 645.53)
Funding

Table 35
102

Materiality and Significance Framework


As required by the Treasury Regulations, Amatola Water Board has developed and submitted a framework of
acceptable levels of materiality and significance, per incident, with the Minister of Water Affairs.

Materiality
Having taken into account the following factors:
• The nature of Amatola Water’s business
• Statutory requirements affecting Amatola Water
• The inherent and control risks associated with Amatola Water
• Quantitative and qualitative issues.

The Amatola Water Board has assessed the levels of materiality, to be:
• Any amount which results from criminal conduct
• R10 000 and above which results from irregular, fruitless or wasteful expenditure caused by gross
negligence
• R250 000 and above, in respect of irregular, fruitless or wasteful expenditure caused by any other
circumstance.

Significance
Application for approval will be made to the Minister of Water and Environmental Affairs in respect of
any individual transaction covered by Section 54(2) of the Public Finance Management Act, where;

• The acquisition or disposal of any significant Amatola Water Board Asset, which exceeds 10% of
Amatola Water Board’s Total Assets.
• Participation, or change in participation, in any significant partnership, trust, unincorporated joint
venture or similar arrangement where the net income accruing to Amatola Water Board exceeds 10%
of annual gross revenue.

Establishment or participation in the establishment, of any entity whose ownership does not include a
local authority, another water board or a national or provincial organ of state.
103
Chapter 16

Bank Account Details


Amatola Water’s bank account details are presented in Annexure I.
104
Chapter 17

Analysis of Risk
Enterprise Wide (Integrated) Risk Management

Risk management is crucial to the requirements of the PFMA, NT, King III and COSO reports but even more
importantly is good business management and signifies good corporate governance. Amatola Water has
developed and adopted an enterprise wide (integrated) framework and policy on risk management. Risk
management is defined within Amatola Water as:

“Understanding the risks that the organisation faces and what their impact would be on the achievability of
the organisation’s objectives, and then mitigating those risks that would have an unacceptable impact on the
organisation.”

To establish a common understanding of the term “risk”, Amatola Water has defined risk as follows:

“The possibility of any event, negative or positive, either internally or externally generated (where the impact
may be internal or external), which may critically impact on the achievement of the business objectives”.

This definition clearly highlights the relationship between risk, implementing business strategy and
achievement of objectives. Amatola Water therefore identifies its highest risks as those most likely to have
a significant impact on the organisation achieving its key strategic business objectives.

The Accounting Authority of Amatola Water, being the Board, is ultimately responsible for ensuring good
governance and oversight on risk management and mitigation. The Board has delegated the operational
oversight responsibility of Risk to the Audit and Risk Committee. Management has an established Risk
Committee and appointed Risk Champions for each division. These Risk Champions assist divisional
directors to establish and monitor risk systems throughout the relevant division.

Amatola Water categorises its risks into three categories:


1. Strategic Risks
2. Divisional Risks
3. Operational / Process Risks

Amatola Water performed its risk identification based on the new integrated risk approach between July
and September 2013 with a series of Board and management workshops. A summary of the Strategic Risk
Register is included below.
105

Risk Reference Strategic Objective 10 Areas Risk Description

SR1 Increased customer base Customer • Inability to increase Primary Revenue


and penetration (delivery Satisfaction. resulting in declining financial viability
options/ services). and relevance in the sector and region.

SR2 Increased customer base Leadership • Inability to increase Primary Revenue


and penetration (delivery and Employee resulting in declining financial viability
options/ services). Development. and relevance in the sector and region.
SR3 Enhanced strategic Financial • Shortage of ring fenced grant funding
effectiveness. Viability. for capital and O&M resulting in Bad
Build cross-functional Debts and reducing service deliver.
excellence/ effectiveness.
Develop operational
competence (individual).

SR4 On-going strengthening Financial • Qualified audit resulting in


of balance sheet to Viability. disestablishment (IRR).
sustainable services
(ratios).
Surplus per financial
year contribution to build
reserves and infrastructure
investment.
Explore sourcing of
funding alternatives
for infrastructure
development.
Sustainable and affordable
tariff.
SR5 Strengthen and deepen Community/ • AW becoming irrelevant in the mind
relationships with Environmental of WSA’s, Communities and key water
statutory, contracted and Sustainability. sector roleplayers.
non statutory stakeholders.

SR6 Reliable infrastructure. Infrastructure • Continuously operating infrastructure


Upgrade plants to provide Stability. above design capacity or standard
minimum 5 megs per day. operating procedures resulting
Influence Provincial Water in asset stripping or premature
Infrastructure Sector infrastructure obsolescence.
Planning (Master Planning).
Minimise production and
distribution losses.
106

Risk Reference Strategic Objective 10 Areas Risk Description

SR7 On-going strengthening Financial • Inability to access the capital markets.


of balance sheet to Viability.
sustainable services
(ratios).
Surplus per financial
year contribution to build
reserves and infrastructure
investment.
Explore sourcing of
funding alternatives
for infrastructure
development.
Sustainable and affordable
tariff.
SR8 Improved customer Stakeholder • Misalignment between AW
satisfaction. Relationships deliverables with that of customers’
Strengthen and deepen and Support. expectations/ needs and inability to
relationships with manage misperceptions resulting in
statutory, contracted and loss of business.
non statutory stakeholders.
SR9 Enhanced strategic Leadership • Inability to position AW in the mind of
effectiveness. and Employee customers and stakeholders as leader
Build cross-functional Development. on water sector policy and setting the
excellence/ effectiveness. agenda.
Develop operational
competence (individual).
SR10 Ensure uninterrupted Operational • Business disruptions resulting in
water supply services to Resiliency. financial and image loss.
customers.

Divisional risk registers with the relevant mitigation are in the process of being completed. Afterwich the
operational / process risk registers will be completed.

One of the critical risks of any business is Fraud. As such Amatola Water will have a separate Fraud
Prevention Committee reporting to the Corporate Risk Committee and at times directly to the Board
Committee as required. Amatola Water has various fraud prevention initiatives in place including:
anonymous tip-off line, declarations of conflict of interest, educational posters and information sharing,
policies and the prevention committee.
107
Chapter 18

Declaration of Disclosure
Subject to the exceptions listed below, the board members of Amatola Water hereby CONFIRM, VERIFY
AND GUARANTEE that:

•  he water board has taken all reasonable steps to comply with all legislation to which it is subject
T
including, but not limited to:
• The Income Tax Act;
• The Occupational Health and Safety Act;
• The Compensation for Occupational Injuries and Diseases Act;
• The Labour Relations Act;
• The Basic Conditions of Employment Act;
• The Skills Development Act;
• The Employment Equity Act and Policy;
• The Skills Development Levies Act;
• The Unemployment Insurance Act;
• The Unemployment Insurance Contributions Act;
• The Preferential Procurement Framework Act;
• The Access to Information Act;
• The Environmental Conservation Act;
• The National Water Act;
(Water use authorisations with regards to abstraction, storage and discharge rights)
• The Public Finance Management Act;
• The Municipal Systems Act;
• The Broad Based Black Economic Empowerment Act
• The Pensions Fund Act;
• The Hazardous Substance Act
• The Construction Industry Development Board Act
• The National Environmental Management Act;
• The Water Services Act;
(S9 regulations “Norms and standards for water services, S10 regulations “Norms and
standards for water tariffs” and that all significant activities, including other activities, are
included in the Business Plan)

•  ndisclosed commercially sensitive information will not significantly affect viability, any
U
projections or any information disclosed.

•  ll revenue owing to the water board has been collected or that steps have been taken in
A
accordance with the appropriate credit control policies.

Exceptions:
• None

Signed

CHAIRPERSON: AMATOLA WATER DATE


108
Chapter 19

SHAREHOLDER COMPACT

Entered into by and between

Amatola Water
herein Represented by the Chairperson of the Board

and

The Government Of The Republic Of South Africa


herein Represented by the Minister of Water Affairs
109

Agreed Principles

1. Introduction

1.1 In terms of regulation 29 of the Treasury Regulations issued in terms of the Public Finance
Management Act, 1999 Act No. 1 of 1999)(as amended) (“the PFMA”), the accounting authority for
a public entity listed in Schedule 3b, must, in consultation with its executive authority, annually
conclude a Shareholder Compact.

1.2 The Shareholder Compact must document the mandated key performance measures and
indicators to be attained by the public entity as agreed between the accounting authority and
the executive authority.

1.3 The required Shareholder Compact in the context of Amatola Water and the executive authority
comprises:

1.3.1 the agreed principles, and;


1.3.2 the key performance objectives, measures and indicators.

2. Interpretation

In this Shareholder Compact, unless otherwise indicated or contrary to the context, the words and
phrases set out below shall have the meanings ascribed to them as follows:

“Board of Directors” means the Board of Amatola Water as appointed by the Minister;

“Executive Authority” or “Minister” means the Honorable Minister of Water Affairs in his or her
capacity as such, or any other Minister of State made responsible for Amatola Water;

“Amatola Water” means the water board deemed to continue in accordance with the Water
Services Act, having its principal place of business at 6 Lancaster Road, Vincent, East London;

“party” means either the shareholder or Amatola Water and “parties” mean both the shareholder
and Amatola Water;

“Shareholder” means the Government of the Republic of South Africa, represented by the Minister.

“Shareholder Compact” means this performance agreement between Amatola Water and
Shareholder together with all appendices attached hereto, as defined in the PFMA.

“Water Services Act” means the Water Services Act, 1997 (Act No 108 of 1997);

“PFMA” means the Public Finance Management Act, 1999 Act No. 1 of 1999)(as amended) and
regulations issued in terms of this Act.
110

3. Agreed Principles

3.1 The Shareholder Compact is designed solely to regulate the relationship between the Shareholder,
on the one hand, and the Board and management on the other.

3.2 The Shareholder Compact is not intended to :

3.2.1 Interfere in any way with the normal company law principles and the normal relationship
between the Shareholder, on the one hand, and the Board on the other. In giving effect to
these principles, the Shareholder would have communicated its expectations to the Board
and management.

3.2.2 Create rights and expectations that third parties may rely upon, it being specifically
recorded that this Shareholder Compact does not create, confer or afford any third party
any rights or expectations in terms hereof.

4. Period

4.1 As contemplated in terms of the PFMA, the Shareholder Compact will be concluded on an annual basis.

4.2 This Shareholder Compact is effective for the period 1 July 2014 to 30 June 2015.

4.3 It is hereby recorded that the agreed objectives, although subject to review annually, set out
matters that are applicable beyond a period of a year. In the event that they are amended, the
parties shall take into account initiatives already commenced on the basis of such objectives.

5. Mandate, Vision and Mission of Amatola Water

5.1 The mandate of Amatola Water is set out in Sections 29 and 30 of the Water Services Act.

5.2 In addition to its mandate, the Shareholder acknowledges that Amatola Water has a strategic
developmental role that may require decisions that are not always optimal from a commercial
perspective, but contribute to National Government’s broader objectives and the growth and
development in South Africa and Africa.

5.3 The Strategic Intent/Vision of Amatola Water is:


“To lead sustainable bulk water services in the Eastern Cape”.

5.4 The Mission of Amatola Water is:


“Amatola Water strives to contribute to the public health and community livelihoods by providing
bulk potable water, bulk sanitation to Water Service Authorities and managing water resource
management infrastructure”
111

6. Strategic Objectives

6.1 In order to attain its strategic intent, Amatola Water has set the following strategic objectives,
which will focus and direct the business activities of the organisation over the planning period:

Balanced Scorecard Quadrant WSU Area (10 Outcomes) 5 Year Objective(s)


SC: Stakeholder and CS: Customer Satisfaction 2 additional Bulk water supply contracts
Customer with WSA (3 currently) (ROU)
Increase volumes to 160 mega litres
per day
Improved customer satisfaction
7.5/10 average score
Acquire contracts for Water Resource
Infrastructure Management
Acquire contracts for Waste water works
WQ: Water and Waste Achieve Statuary Quality compliance
Water Quality at All AW Owned and ROU plants
efficiently
Blue drop advisory services
CE: Community / Contribute to decent living standards
Environmental and enhance public health within
Sustainability communities in ADM through quality
adequate water services
Provide services and invest in
technologies / systems in an
environmentally responsible and
sustainable manner
SS: Stakeholder Strengthen and deepen relationships
Relationships & Support with statuary, contracted and non
statutory stakeholders
Be centre of new provincial regional
bulk utility
F: Financial Perspective FV: Financial Viability On-going strengthening of Balance
Sheet to sustainable services (Ratios)
Surplus per financial year
contribution to build reserves for
infrastructure investment
Explore sourcing of funding
alternatives for growth of
new infrastructure (excluding
replacement)
Sustainable and affordable Tariff
112

Balanced Scorecard Quadrant WSU Area (10 Outcomes) 5 Year Objective(s)


P: Internal Processes WA: Water Resource 98% Assurance of supply in ADM,
Adequacy Ndlambe and ORTDM Region
(Sandile and Mzintlava Dams)
IS: Infrastructure Stability 90% Availability of water supply for
all bulk services
AW Plant Upgrade and KSD PI Projects
Develop and EC water master plan to
direct future funding streams
Minimise production and distribution
water losses
OR: Operational Resiliency Interconnected supply to Amahlathi,
Ngqushwa, Nkonkobe, Ndlambe
Business continuity system
implemented
Fully implemented IMS system
Accredited laboratory providing
services across the entire Eastern Cape
OO: Operational Aligning People, Skills, Systems,
Optimisation Policies and Procedures for Strategy
Implementation
Fully functional governance,
compliance, risk and fraud
prevention systems for clean audit
Continuous improvement system
LG: Learning and Growing ED: Leadership & Enhanced Strategic Effectiveness
Employee Development
Build Cross-Functional Excellence/
Effectiveness
Develop Operational Competence
(individual)
Entrenching the appropriate
corporate culture: Decisive
Leadership; resolving Organisational
Politics; and Issues of Conflict
To be a renowned knowledge hub
for the water services sector in the
Eastern Cape

6.2 The Amatola Water strategic objectives, as setout in 6.1 above, are underpinned by specific goals,
defined key activities and targets. These are broadly categorized as follows:

6.2.1 Financial
Increase the financial turnover and improve the sustainability of the organisation. This will be
achieved through growth in the primary business while maintaining secondary business services
at there current levels
113

6.2.2 Customer
Increase the client base of the organisation and penetration of services with clients. This will be
achieved through the provision of legally compliant, efficient and effective service delivery.

6.2.3 Internal
Focus will be placed on ensuring water resource adequacy, improving infrastructure stability,
reinforcing operational resiliency and enhancing operational optimization.

6.2.4 Learning and Growth


The organisation will focus on developing the capacity and skills of its staff through targeted
training programmes and partnerships. A strong emphasis will also be placed on developing
leadership capacity within the organisation.

7. Amatola Water’s Developmental Role

7.1 Initiatives in support of Amatola Water’s developmental role can be classified into the following categories:

7.1.1 Social Development Initiatives such as shareholder projects, BBBEE promotion, water
conservation/awareness programmes, donations and social investment.

7.1.2 Developmental Projects that have a significant developmental impact with a particular
focus on improving rural livelihoods will be implemented by Amatola Water.

7.1.3 Training and Capacity Building initiatives such as developing a learning academy, a graduate
placement programme, a bursary scheme and continuing professional development programmes.

7.2 The shareholder hereby confirms that the Board is empowered to develop such high impact
projects. As regards any ma jor developmental projects, it is necessary that Amatola Water’s
developmental role be fulfilled in a manner that is effective and sustainable.

7.3 In the event that the Executive Authority issuing a directive that Amatola Water undertakes
shareholder projects, such directive will be issued in accordance with the provisions of relevant
sections of the WSA and the PFMA.

8. Business Plan and Strategic Intent

8.1 Amatola Water’s Business Plan, incorporating its Policy Statement and related financial plans shall be
submitted to the Executive Authority in terms of Section 40 of the WSA and Section 52 of the PFMA.

8.2 Amatola Water shall ensure that its Business Plan and its objectives, goals and targets are aligned with
the strategic intent, which will inform the business focus and direction for Amatola Water into the future.

8.3 The strategic business targets, as set out below will be the measure for control and monitoring of
the performance of Amatola Water by the shareholder.
114

9. Roles and Responsibilities

9.1 The Shareholder:

9.1.1 Is hereby empowered and hereby reserves the right to determine initiatives, projects or
activities that Amatola Water shall undertake or become involved in, in the national interest.

9.1.2 The key performance measures for Amatola Water shall be adjusted by the Shareholder to
take into account Amatola Water’s developmental role.

9.1.3 The Board and the Shareholder shall agree on an amount to be set aside for developmental
projects annually referred to in clause 7.

9.2 The Board:

9.2.1 is hereby mandated to oversee and to contribute to development of the strategic intent and
furthermore to oversee the management of the business in accordance with such strategic
intent, business plan and any applicable legislation;

9.2.2 and its members shall exercise their skill and fiduciary duties to ensure that management
pursue the objectives and targets as set out in the business plan;

9.2.3 commits itself to the achievement of the Strategic Intent, strategic objectives and goals of
Amatola Water, and always to act within its powers and the best interests of Amatola Water,
the shareholder and customers;

9.2.4 accepts responsibility to direct and guide the business in a proper manner in keeping with
good governance practices, the Water Services Act, the PFMA, this Shareholder Compact,
including the Business Plan and Policy Statement; and
9.2.5 recognises the importance of speedy decision-making, and will use its best endeavors to
prevent undue delays with regard to critical decisions.

9.2.6 will ensure that Amatola Water and all its subsidiaries shall, subject to relevant legislation,
comply with the policies of the Shareholder, and that they adhere to acceptable governance
practices in terms of reporting and accountability.

10. Undertakings by the Shareholder

The Shareholder undertakes for the duration of the agreement:

10.1 not to introduce new or additional requirements during the validity of this compact other than
through a process of consultation with the Board;

10.2 to provide reasonable notice before the introduction of any new or additional requirements;
115

10.3 that, if new or additional requirements are introduced, the parties shall amend the key performance
indicators and targets;

10.4 on the specific request of the request of the Board , to provide appropriate strategic leadership,
support and direction to Amatola Water, where necessary, to enable the Board to fulfill its fiduciary
responsibilities.

11. Key Performance Measures and Indicators

The corporate strategic Key Performance Indicators for Amatola Water, as contemplated in the
PFMA, are attached hereto, it is hereby recorded that they have been accepted by the Shareholder
at the Board Meeting held on 25 April 2014.

Dated at…………………………………on this the………..day of………………………………2014.

…………………………………………………………….
(Chairperson of the Board of Amatola Water)

AS WITNESSES:

1……………………………………………………………….

2……………………………………………………………….

Dated at……………………………………………on this the……………………day of………………………..2014.

………………………………………………………………
(Minister of Water Affairs)
Shareholder Representative for and on behalf of the Republic of South Africa).

AS WITNESSES:

1…………………………………………………………….

2……………………………………………………………….
116

Annual Shareholder Compact Appendix

Amatola Water: Period 2014 To 2018


Shareholder Compact APPENDIX 1

1. Introduction
The performance indicators and targets in Appendix 1 to the shareholder compact are aligned
with the Strategic Plan of the Department of Water Affairs, as set out below.

No Strategic outcome Government outcomes and Strategic objectives


oriented goals other initiatives
1. An efficient, effective 12 (Public service) 1.1. Improve and increase the skills pool and
and development build competencies in the Department and
oriented sector leader within the sector
1.2.  Effective and efficient internal control
environment
1.3. Implement programmes that
create job opportunities
New Growth Path 2 1.4. Improve water resources and
(job creation) water services information
1.5. Coordinate regional and global water
cooperation
1.6. Ensure effective performance of water
management and services institutions
2. Equitable and 6 (Infrastructure) 2.1. Ensure the availability of /
sustainable access to water supply for
provisioning New Growth Path 2 environmental and
of raw water socioeconomic use
2.2. Improve equity and efficiency in water
allocation
2.3. Strengthen and implement strategies for
water management in the country

2.4. Improve water use efficiency


3. Provision of equitable 9 (Local government) 3.1. Ensure compliance to water
and sustainable water legislation
services of acceptable
quantity and quality 3.2. Support the water sector

4. Protection of 10 (Environment) 4.1. Ensure compliance to water legislation


freshwater
ecosystems 4.2. Improve the protection of water
resources and ensure their sustainability
2. Key Performance Indicators And Targets: Amatola Water Board

117
Performance Alignment Outcomes Indicators Measure Actual Target Target Target Target Target
Objective /Impact 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19
Government DWA
Outcomes Strategic
Plan
1. Water Quality 9 – Local SO 3.1 Water quality Test results, % 99 98 98 98 98 98
Compliance Government standards met SANS 241 compliance

2. Non Revenue 6– SO 2 .2 Reduced Water lost % 12 12 11 10 9 8


Water Infrastructure levels of as a % of
10 - unaccounted total water
Environment SO 4.1 for water produced
(UAW)

3. Reliability of 6- SO 22.1 No unplanned % number of % 2 2 2 2 2 2


supply Infrastructure interruptions days supply
to supply disrupted
exceeding 24 divided by
hours total number
of possible
supply days

4. Financial 9 – Local SO 3.1 unqualified Annual Qualified/ Un - Un - Un - Un - Un - Un -


Reporting Government audit report external audit Unqualified qualified qualified qualified qualified qualified qualified
Compliance

5. Staff Turnover 12- Public SO 1.1 Optimal staff % staff % 8.4 7 6 6 6 6


Service retention leaving
6. Board Member 12- Public SO 1.2 Improved Annual % 86 80 80 80 80 80
Attendance Service performance performance
of fiduciary assessment
duties/
governance

7. Effective 12- Public SO 1.2 Internal audit Internal audit No repeat 40 10 5 2 2 2


Internal Service findings dealt reports and
Controls with unresolved
And Risk findings
Management
8. Bulk Supply 12- Public SO 1.6 Statutory and Municipalities/ % 100 100 100 100 100 100
Agreements Service service level other
Concluded with agreements in customers
Municipalities/ place with bulk
Other Customers supply
agreements
Performance Alignment Outcomes Indicators Measure Actual Target Target Target Target Target
Objective /Impact 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19
Government DWA
Outcomes Strategic
Plan
9. Improve 12- Public SO 1.6 Improved Financial Liquidity 0.87 1.25 1.50 1.50 1.75 1.75
Financial Ratios Service viability and ratios
sustainability Gross profit 22 30 30 35 40 45
margin %
Net profit 0% 3% 4% 4.5% 5% 5%
margin %
(primary
activity)
Debt 0% 1% 1% 1% 1% 1%
Equity%
Return on 0.02% 0.5% 2% 2.5% 3% 3%
assets %
Debtors 113 days 60 days 60 days 60 days 60 days 60 days
days
10. Increase 12- Public SO 1.3 % of spend Quarterly % increase 75 100 100 100 100 100
BBBEE Spend Service increased and reports
increased new
entrants

11. Manage Costs 12- Public SO 1.2 No over Financial % variance 5 5 5 5 5 5


Within The Service expenditure/ reports
Approved losses
Budget

12. Capital 6- SO 2.1 Infrastructure Overall % variance 97 10 10 10 10 10


Expenditure Infrastructure available project
to meet expenditure
demands within R
target

Overall % variance 100 15 15 15 15 15


project
completion
dates within
targets
13. Increased 6- SO 2,1, Contribution CAPEX spend CAPEX R14 251 337 R148 147 841 R335 061 351 R16 697 500 R8 000 000 R6 000 000
Access to Services Infrastructure 2.3 to national /projects spend
objectives (‘000)
14.Engagement 9 – Local SO 3.2 Extent of % of total 48 32 30 28 26 25
in Secondary Government involvement turnover
Activities
15. Achieve 12- Public SO 1.2 Reporting Statutory Submission All dates All dates All dates All dates All dates All dates
Statutory Service compliance submissions dates met/ met met met met met met
Reporting achieved made on time missed
Compliance
118
Performance Alignment Outcomes Indicators Measure Actual Target Target Target Target Target
Objective /Impact 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19
Government DWA
Outcomes Strategic

16. Jobs Created 12- Public


Service
Plan
SO 1.3 Permanent
and contract
Total Number Number 342 355 365 375 385 400
119
(direct)
12- Public SO 1.3 Temporary Total Number Number 704 600 950 200 150 150
Service (indirect)

17. Corporate 12- Public SO 1.6 Good Number of Number 0 2 2 3 3 4


Social Service corporate initiatives and R
Responsibility citizenship value
Initiatives
18. Training 12- Public SO 1.3 Skills and Training Total 21 150 200 250 250 250
And Skills Service capacity courses, Number
Development building learner-ships,
bursaries
19. Good 12- Public S O 1.2 Improved Breaches of Number 0 0 0 0 0 0
Governance Service controls and materiality
risk mitigation and
significance
framework
20. Other (water
board specific
objectives)
Legend

Amatola Water’s Gazetted Area of Operation (47 515Km2)


Local Municipalities
Area of Operation 2014
District Municipalities Annexure A - Service Area Map
120
A
Amm aa tt oo ll aa WW aa tt ee rr Legend
A r e a s
A r e a s o f So f S uu pp pp ll yy 22 00 11 44 Towns Supply Areas Local Municipalities
Legend

Towns Supply Areas Local Municipalities


121
Amahlathi
SEYMOUR
STUTTERHEIM
KOMGA
Mnyameni/
Masincedane
Great Kei
KEISKAMMAHOEK Rooikrantz
Dam
Binfield Park
Supply KEI ROAD
Dam Supply

FORT BEAUFORT
ALICE
MIDDLEDRIFT
BHISHO
Nkonkobe KING WILLIAM'S Nahoon
TOWN BERLIN Dam Supply

Debe Dam Laing Dam


Supply MDANTSANE
Supply
Sandile
Dam Supply

EAST LONDON
Buffalo City
Annexure B - Scheme Layout Plan

Glenmore Supply
Peddie
Regional
PEDDIE Supply
Makana

GRAHAMSTOWN HAMBURG

Ngqushwa JOE GQABI ALFRED NZO

O.R. TAMBO
CHRIS HANI

BATHURST
Ndlambe AMATHOLE
BUFFALO CITY
CACADU METRO
PORT ALFRED NELSON MANDELA BAY
Kenton-On-Sea
METRO
ALEXANDRIA Supply
KENTON ON SEA E a s t e r n C a p e L o c a l i t y M a p

CANNON ROCKS
122
Annexure C - Key Statistics

Contact Details

CEO Name: M Msiwa


Telephone: 043-7073700
Fax: 043-7073701
Cell:
E-Mail: mmsiwa@amatolawater.co.za
CFO Name: J Dlamuka
Telephone: 043-7073700
Fax: 043-7073701
Cell:
E-Mail: jdlamuka@amatolawater.co.za

Postal Address Private Bag X3


Vincent
East London
5217

Scheme Name and Responsibility

Year 0 (current year) 2014 Bulk Responsibility Retail Responsibility


Scheme or supply area 1 Nahoon Y N
Scheme or supply area 2 Laing Y N
Scheme or supply area 3 Sandile Y N
Scheme or supply area 4 Peddie Y N
Scheme or supply area 5 Binfield Y N
Scheme or supply area 6 Masincedane Y N
Scheme or supply area 7 Upper Mnyameni Y N
Scheme or supply area 8 Debe Y N
Scheme or supply area 9 Glenmore Y N

Scheme or supply area 10 Bushmans River / Kenton-on-Sea Y N


123
Annexure C - Key Statistics

Macro Economic Assumptions

Item Business Plan Assumptions


2014 2015 2016 2017 2018 2019
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Raw water tariff increase
12.90% 12.90% 12.90% 12.90% 12.90% 12.90%
percentage
CPIx (as provided by
6.00% 5.90% 5.70% 5.40% 5.40% 5.20%
DWAF / National Teasury)
Investment Rates (Fixed) 7.84% 8.10% 8.68% 9.55% 9.67% 9.74%
Borrowing Rates
8.50% 8.50% 9.25% 10.50% 10.50% 10.50%
(Short Term)
Borrowing Rates
7.18% 7.72% 8.10% 8.59% 8.83% 8.98%
(Long Term)
Emoluments Increases 7.58% 8.15% 8.50% 7.90% 8.00% 7.80%
Electrical Power 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Chemicals 5.90% 5.60% 5.30% 5.50% 5.50% 5.30%
PPI 5.90% 5.60% 5.30% 5.50% 5.50% 5.30%
Number of Employees 342 345 355 365 375 385
Water Research Levy 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Maintenance 5.90% 5.60% 5.30% 5.50% 5.50% 5.30%
124
Annexure C - Key Statistics

Regional Socio-economic Statistics (2011 Census)

Population Population Average % below Average Percentage Percentage


growth Household poverty line Household Employed unemployed
size income
Eastern Cape 6 562 052 0.4% 3.8 30.8% R 5 900 40.6% 30.8%
OR Tambo 1 364 943 0.5% 4.5 36.5% R 4 000 15.0% 43.1%
Amatole 892 637 0.6% 3.5 32.0% R 3 700 17.5% 42.0%
Alfred Nzo 801 344 0.4% 4.7 37.0% R 3 370 15.3% 42.0%
Chris Hani 795 461 -0.2% 3.6 30.3% R 4 560 21.0% 38.0%
Cacadu 450 584 1.5% 3.7 22.9% R 6 960 41.3% 25.0%
Joe Gqabi 349 768 0.6% 3.6 47.0% R 4 190 25.0% 34.3%

Change in Access to Water Services between 1995 and 2011(Census Data)

Piped Piped Communal Communal Water- Borehole/ Dam/river/ Other/


water water Piped Piped carrier/ rain-water stream/ Unspecified/
inside inside water water> tanker/ tank/well spring Dummy
dwelling yard <200m. 200m. Water
vendor
Eastern Cape 23.6 16.5 20 12.4 0.4 4.1 22.1 0.9
Cacadu 48.7 30.5 7.6 8.2 0.3 2 1.5 1.2
Amatole 21.6 17.5 24.3 14.1 0.3 5.3 16.3 0.7
Chris Hani 17.5 17.7 26.6 14.2 0.4 3.8 19.1 0.7
Joe Gqabi 11 18.4 23.2 14.6 1.4 4 25.4 2.1
OR Tambo 4.6 6.8 17 10.7 0.6 6.6 52.7 1
Alfred Nzo 4.1 11.8 37.2 17 0.5 2.3 26.6 0.5

1995 (%)

Eastern Cape 20.6 13.2 13 11.8 0.6 3.6 35.6 1.6


Cacadu 34.1 32.5 14.8 7.5 0.5 5.6 4.2 0.8
Amatole 20.6 11.2 18.3 13.6 0.8 3.1 30.5 1.9
Chris Hani 14.2 11.1 14.7 13.7 0.7 4.2 39.5 1.8
Joe Gqabi 9.2 11 18.3 14.7 0.5 7.9 36.5 1.9
OR Tambo 3.3 5.3 6.6 10.5 0.8 3.4 68.5 1.6
Alfred Nzo 2.8 5 9.7 16.4 0.6 8.5 55 1.9
125
Annexure C - Key Statistics

Change in Access to Sanitation between 1195 and 2011 (Census Data)

Flush/ chemical Pit latrine Bucket latrine Other

2011 (%)

Eastern Cape 38.7 27.2 3.6 30.5


Cacadu 71.6 12.9 8.1 7.4
Amatole 39.9 28.6 2.2 29.4
Chris Hani 28.3 26.2 3.5 42.1
Joe Gqabi 21.3 35.2 6.1 37.3
OR Tambo 9.8 36.1 0.8 53.4
Alfred Nzo 10.6 62.5 1.6 25.2
1995 (%)
Eastern Cape 32.3 30.1 6.7 30.9
Cacadu 42.2 26.6 19.7 11.6
Amatole 36.2 32.4 2.8 28.7
Chris Hani 19.5 31 7 42.4
Joe Gqabi 12.9 35.3 9.8 42
OR Tambo 8.3 39.5 2.6 49.6
Alfred Nzo 6.2 60 1.4 32.3

Human Development Index by district, 1995 – 2010 (Quantec)

1995 2005 2010


Eastern Cape 0.582 0.528 0.513
Cacadu 0.569 0.521 0.526
Amatole 0.592 0.534 0.524
Chris Hani 0.546 0.491 0.479
Joe Gqabi 0.518 0.493 0.497
OR Tambo 0.520 0.468 0.465
Alfred Nzo 0.543 0.552 0.551
Nelson Mandela Bay Metro 0.667 0.663 0.656
126
Annexure D - Strategic Plan and Corporate Scorecard

Amatola Water 20 Year Strategy 2013 to 2033

1. Overview
Amatola Water has adopted a standard strategy formulation, implementation and monitoring
cycle as displayed in the figure below:

Vision, Mission, Strategic Divisional Business Plans


5yr & 1yr Corporate
SWOT and Environmental Intent, 20yr & 5yr and Scorecards
Scorecard, Budgets,
Analysis Strategic Goals, Strategic (Individual Performance
Activities
Interventions Contracts Aligned)

Review Resource
Update Business Develop Systems and Monitoring and Managing
Requirements for Successful
Plan and Shareholders Processes that Support Performance against
Implementation: Structure,
Compact Strategy Implementation Strategy
Financial, Infrastructure

Quarterly Reporting and Organisational Performance Monitoring


Presentations quarterly by managers per division against set objectives

Continue Working and Reporting on Existing Scorecard, Business Plan, Shareholders Compact
and Performance Contracts until Start of New Financial Year

2. Structure of Amatola Water Corporate Scorecard

Amatola Water has adopted the Balanced Scorecard approach with the four quadrants as set
out by Kaplan and Norton. As an organ of state and not an organisation which focus on profit
the customer quadrant is renamed and placed before the financial quadrant. As delivering on
customer and stakeholder expectations in the desired end result and finance a mechanism that
enables this, not the end result. This view is supported by Kaplan and Norton for organisations
that are not established for financial gain, thus the four quadrants are as follows:

1. Stakeholder and Customer Quadrant


2. Financial Quadrant
3. Internal Processes Quadrant
4. Learning and Growth Quadrant

As part of giving appropriate structure to its strategy measures and performance monitoring and
management system, Amatola Water has also adopted the Ten Areas for Successful Water Utility
Service Provision.
127

Effective and Holistic WSP Function

Employee Water
Product Customer Community
Leadership/ Resources
Quality Satisfaction Sustainability
Development Adequacy

Financial Infrastructure Operational Operational Stakeholder


Viability Stability Resiliency Optimisation Support

These ten fit within the four balanced scorecard quadrants and help ensure Amatola Water focuses on
all the relevant areas to be a successful water utility. The ten are as follows:

1. Water and Wastewater Quality: is achieved when Amatola Water produces bulk potable water
and wastewater in compliance with statutory requirements and consistent with customer needs
at both AW owned and ROU plants.

2. Customer Satisfaction: is the degree to which Amatola Water provides reliable, responsive, and
affordable products and services to WSA customers which meet or surpass customer expectations.
Timely feedback to customer-agreed service levels to maintain responsiveness to customers
needs and to delight these customers.

3. Stakeholder Relationships and Support: As an organ of state Amatola Water has a variety of
different stakeholders, most notable is the Department of Water Affairs. This outcome includes
managing and building relationships with the various stakeholder groups by aligning initiatives
to support key stakeholder programs and informed by the inter-governmental framework, as
well as influencing these stakeholders to have common understanding of Amatola Water role and
catalytic initiatives within the sector.
4. Infrastructure Stability: is achieved when Amatola Water’s infrastructure is consistent with
customer service levels, and consistent with anticipated growth and system reliability goals.

5. Financial Viability: is achieved when Amatola Water manages operating expenditures and
increasing revenues in a manner that strengthens the balance sheet in a sustainable manner. In
addition, the organisation aims at a sustainable tariff that is consistent with customer expectations,
recovers costs and provides for future expansion.
128

6. W
 ater Resource Adequacy: is achieved when Amatola Water assesses the scarcity of freshwater
resources, investigates sustainable alternatives, manages water abstractions assiduously and has
access to stable raw water resources to meet current and future customer needs.

7. Community / Environmental Sustainability: is achieved when Amatola Water is explicitly cognisant


of and attentive to the impacts it has on current and future community sustainability, supports
socio economic development and manages its operations, infrastructure, and investments to
protect, restore and enhance the natural environment, whilst using energy and other natural
resources efficiently.

8. L
 eadership and Employee Development: is achieved when Amatola Water is dedicated to continual
learning and improvement, recruits and retains a workforce that is competent, motivated,
adaptive and works safely, ensures institutional knowledge is retained and improved, provides
opportunities for professional and leadership development and is led by an integrated senior
leadership team.

9. O
 perational Resiliency: is achieved when Amatola Water proactively and effectively manages
business risks across all areas of the business in a manner that ensures sustainability of the
organisation even in times of challenges and difficulties.

10. Operational Optimization: is achieved when Amatola Water has ongoing, timely, cost-effective,
reliable, and sustainable performance improvements in all facets of its operations, has a culture of
accountability and every employee and department striving to improve systems and processes.

3. Strategic Direction, Vision, Mission and Values


Vision
“To lead sustainable bulk water services in the Eastern Cape”.

Mission
“Amatola Water strives to contribute to the public health and community livelihoods by providing
bulk potable water, bulk sanitation to Water Service Authorities and managing water resource
management infrastructure”

Values
Amatola Water values continue as: “We are inspired by an unwavering commitment to empower our
stakeholders through the consistent demonstration of:
Responsibility
Excellence
Integrity
Accountability”
129

4. 20 Year Strategic Goals and Catalytic Initiatives

4.1 20 Year Goals

Product Quality (Primary):


20 years Blue and Green Drop certification for all bulk works - (owned and ROU)

Providing accredited laboratory water services for the entire province

Primary Product Quantity:


20 years Increase volumes to 350 mega litres per day


Customer Satisfaction:
20 years 80% of WSA’s in the province as contracted customers through ownership
or ROU

Employee / Leadership Development:


20 years Enhanced Strategic Effectiveness

Build Cross-Functional Excellence/ Effectiveness

Develop Operational Competence (individual)

Renowned knowledge hub for water services sector in EC

Water Resource Adequacy:


20 years 98% Assurance of Supply at a minimum service level of 750ℓ per household
per day

Community Sustainability:
20 years Contribute to decent living standards and enhance public health within
communities in EC through quality adequate water services

Financial Viability:
Baseline: current volume 31 million m3 / annum (+-120,000 households)
20 years Improve solvency, liquidity and profitability to achieve a Fitch Investment
Grade rating

Infrastructure Stability:
Baseline: current volume 31 million m3 / annum (+-120,000 households)
130

20 years 80 % of the infrastructure master plan implemented (investment / needed


resources)

98% Availability of Water Supply and 90% reliability of sanitation services

Operational Resiliency:
20 years Bulk water utility with interconnected regional schemes in the Eastern Cape

Fully implemented businesses continuity system (IMS, Quality systems,


Knowledge Management)

Operational Optimisation:
20 years Continuous improvement philosophy institutionalized

Continuous alignment of People, Skills, Systems, Policies and Procedures for


Strategy Implementation

Stakeholder Support:
20 years To be the center of a fully-fledged provincial water utility (IRR)

Strong and well established relationships with stakeholders – internal and external

4.2 Catalytic Initiatives


The following are the list of key Catalytic Initiatives which will drive the successful
implementation of the strategy and success of Amatola Water:

1. Institutional Realignment and Reform.


2. AW Plant Upgrade and KSD PI Projects.
3. Aligning People, Skills, Systems, Policies and Procedures for Strategy
Implementation.
4. Entrenching the appropriate corporate culture: Decisive Leadership; resolving
Organisational Politics; and Issues of Conflict.
5. Fully functional governance, compliance, risk and fraud prevention systems for
clean audit.
131

5. 5 Year Strategic Objectives

Balanced Scorecard
Quadrant WSU Area (10 Outcomes) 5 Year Objective(s)
SC: Stakeholder CS: Customer 2 additional Bulk water supply contracts with WSA (3
and Customer Satisfaction currently) (ROU)

Increase volumes to 160 mega litres per day

Improved customer satisfaction 7.5/10 average score


Acquire contracts for Water Resource Infrastructure
Management

Acquire contracts for Waste water works


WQ: Water and Waste Achieve Statuary Quality compliance at All AW Owned
Water Quality and ROU plants efficiently
Blue drop advisory services

CE: Community Contribute to decent living standards and enhance


/ Environmental public health within communities in ADM through
Sustainability quality adequate water services
Provide services and invest in technologies / systems in
an environmentally responsible and sustainable manner
SS: Stakeholder Strengthen and deepen relationships with statuary,
Relationships & contracted and non statutory stakeholders
Support
Be centre of new provincial regional bulk utility
F: Financial FV: Financial Viability On-going strengthening of Balance Sheet to
Perspective sustainable services (Ratios)
Surplus per financial year contribution to build
reserves for infrastructure investment
Explore sourcing of funding alternatives for growth of
new infrastructure (excluding replacement)
P: Internal Processes WA: Water Resource 98% Assurance of supply in ADM, Ndlambe and ORTDM
Adequacy Region (Sandile and Mzintlava Dams)
IS: Infrastructure 90% Availability of water supply for all bulk services
Stability
AW Plant Upgrade and KSD PI Projects

Develop and EC water master plan to direct future


funding streams
Minimise production and distribution water losses
132

Balanced Scorecard
Quadrant WSU Area (10 Outcomes) 5 Year Objective(s)
P: Internal Processes OR: Operational Interconnected supply to Amahlathi, Ngqushwa,
Resiliency Nkonkobe, Ndlambe
Business continuity system implemented

Fully implemented IMS system

Accredited laboratory providing services across the


entire Eastern Cape
OO: Operational Aligning People, Skills, Systems, Policies and
Optimisation Procedures for Strategy Implementation
Fully functional governance, compliance, risk and
fraud prevention systems for clean audit
Continuous improvement system

LG: Learning and ED: Leadership


Enhanced Strategic Effectiveness
Growing & Employee
Development Build Cross-Functional Excellence/ Effectiveness

Develop Operational Competence (individual)


Entrenching the appropriate corporate culture:
Decisive Leadership; resolving Organisational Politics;
and Issues of Conflict
To be a renowned knowledge hub for the water
services sector in the Eastern Cape
6. Corporate Scorecard

WSU Ob Objectives Me No. Measure / Base line Y1 Q1 Actual Q2 Target Q2 Actual Comment
No. Indicator Target

STAKEHOLDER & CUSTOMER PERSPECTIVE


133
Increased
customer base Number of
and penetration bulk potable
(delivery options/ water supply BCMM, ADM &
CS CS1 services) CS1.1 agreements 3 3 3 3 3 Ndlambe in place

Number of ROU AW singed a ROU


agreements in with Makana LM in
CS1.2 place 0 1 1 1 1 October 2013

Volume of This is normal during


Water Sold by the peak summer
owned and ROU months and will drop
CS1.3 plants 85 mℓ/day 87 90.5 87 92.38 towards winter time.

Average
Improved Customer
customer satisfaction
CS CS2 satisfaction CS2.1 score n/a 6 - - -

% Compliance
to customer kpa Systems to manage
as per customer this still being
CS2.2 charter n/a 70% 0 70% 0 implemented

Newly appointed
plant superintendents
% Compliance and changing of
Achieve SANS at SANS Class 1 chemical suppliers
All AW Owned potable water were the cause
& ROU plants (Owned and for the drop in the
WQ WQ1 efficiently WQ1.1 ROU) 99% 98% 99.1% 98% 97.9% compliance target
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment

% Compliance
with effluent
license
standards
(Owned and No agreement in
WQ1.2 Rou) n/a 60% N/A 60% N/A place or owned plants

Number AW
Schemes with
capacity to
Contribute to supply 750ℓ
decent standard per household
of living and in per day at
support of rural terminal Nahoon & Laing
CE CE1 livelihoods CE1.1 reservoir 2 2 2 2 2 schemes

Provide services
and invest in % Compliance
technologies / with
systems in an environmental
environmentally management
responsible plans across
and sustainable AW (owned and 8 of 10 works
CE CE2 manner CE2.1 ROU) n/a 50% 30% 5% 80% compliant

Survey was done by


UP and the report
No of said that payback
alternative period is not viable
energy should reconsider
technologies after upgrades at
CE2.2 introduced 1 1 0 0 0 Sandile.
134
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment
No of
Permanent
jobs created in
135
CE2.3 programs 0 30 14 7 20
No. of
Temporary
Jobs Created
CE2.4 (indirect) n/a 90 660 25 684
Strengthen
and deepen % Compliance
relationships with Executive
with statuary, Authority
contracted and mandates DWA quarterly
non statutory (MTEF, NDP and reported submitted
SS SS.1 stakeholders SS1.1 DWA Strategy) 100% 100% 100% 100% late

% Compliance
with contractual
commitments Systems still being
SS1.2 (excl customers) 95% 95% 0 95% 0 set up
No of
consultative
meetings with
key interest Still on target for the
SS1.3 groups n/a 4 2 1 0 year
FINANCIAL PERSPECTIVE
The current ratio is
adverse at the end of
On-going quarter 2, the debtors
strengthening of have significantly
Balance Sheet decreased compared
to sustainable to debtors at year
FV FV1 services (Ratios) FV1.1 Liquidity Ratios: 0.87 1.25 1.09 1.25 1.21 end by almost 59%.
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment
The debtors’ days
are adverse as the
balance of trade
debtors include
both primary and
secondary debtors
FV1.2 Debtors Days 113 70 132 70 127 where
Revenue has not
grown sufficiently
to the level of
complementing the
number of employees
in the organisation.
Section 30 revenue is
relatively lower than
Employee to budget while there is a
revenue (R slight movement in the
FV1.3 Million) R0.9 R 1 mil 200 K 250 K 420 K number of employees.
Solvency ratio is
FV1.4 Solvency ratio 0.87 1.25 2.13 1.25 2.45 favorable.
Return on assets is
favorable due to
higher than expected
Return on assets profit return for the
FV1.5 % 0.02% 0.1% 1.11% 0.1% 3.99% quarter.
Increases in the
volumes sold for
potable and raw
water has contributed
Net profit positively to the
FV1.6 margin % (All) - 3% 7% 3% 13% surplus.
Increases in the
volumes sold for
potable and raw
water has contributed
Gross profit positively to the
FV1.7 margin % (All) 22% 25% 28% 25% 34% gross profit.
136
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment

Total
Expenditure on direct
input costs has increase
to accommodate the
137
expenditure demand for potable
FV1.8 R in 000 R550 R80 R138 R159 water.
The target has been
achieved in the second
quarter however
there is needs for
improvement on BBBEE
spend on Qualifying
Small Enterprises
and Emerging Micro
Enterprises in the
FV1.9 BBBEE spend - 100% 100% 100% 100% coming quarters.
Electricity usage is
relatively high during
the peak demand
season (winter).
There's a downward
trend from October
to December 2013 as
we move in swiftly
Electricity Cost in the low demand
FV1.10 (R/KL) 0.56 0.60 0.78 0.60 0.73 season.
Actual chemical
expenditure and
usage has increased
Chemical Cost in the second quarter
FV1.11 (R/KL) 0.34 0.36 0.20 0.36 0.26 due to water turbidity.

Increases in the
Surplus per volumes sold for
financial year potable and raw
contribution to water has contributed
build reserves Revenue in positively to the
for infrastructure Rands (in million revenue generated in
FV FV2 investment FV2.1 rands) R423 R352 R84 R140 R167 the second quarter
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment
Higher than expected
surplus due to higher
sales of potable
water and monthly
Surplus in Rands recognition of project
FV2.2 (in Million) 0 R10 R6 2.5m R21 revenues.

Amount of
targeted surplus
placed in Management targets
reserve fund (in to put into reserves
FV2.3 million Rand) 0 R6 R3.6 1.5 R13 60% of the surplus.
Section 30 revenue
has been generally
lower than budgeted
due to loss of revenue
% Revenue from the termination
Secondary of Joe Gqabi contract
Business / Total and other secondary
FV2.4 Revenue 55% 45% 33% 55% 34% business activities.

The labour costs to


total cost ratio is
adverse. This ratio is
going to improve as
some of the employees
will be transferred to
% Labour costs ADM in third and fourth
FV2.5 of total costs 41% 38% 41% 38% 40% quarter.
Explore sourcing
of funding
alternatives for
infrastructure Amount of Grant Not scheduled in first
FV FV3 development FV3.1 funding secured R0 R0 N/A R0 0 year

Amount of
Lending (capital
market) funding Not scheduled in first
FV3.2 secured 0 R0 N/A 0 0 year
138
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment
Amount of
Development
Agency funding Not scheduled in first
139
FV3.3 secured 0 R0 N/A 0 0 year
Tariff negotiations
% average and consultation
increase of is progress. The
tariff (within final average tariff
government increase will be made
Sustainable & targeted available in the third
FV FV4 Affordable Tariff FV4.1 inflation) 10% 8% 9.3% 8% 9.3% quarter.
INTERNAL PROCESSES QUADRANT

Adequate water
security and % assurance
assurance in level (1 in 50 No over abstraction
support of water year drought / from any resource at
WA WA1 supply WA1.1 restriction) 98% 98% 98% 98% 98% present supply levels
The target has
not been achieved
however there
is great need to
increase revenue
generated from
% Infrastructure operations in order to
Reliable CAPEX vs. start with top priority
IS IS1 infrastructure IS1.1 Revenue 0% 4% 1% 1% 0% CAPEX projects.

Overall
capex project
completion Progress is being
dates within made with planning
targets as a and feasibilities on
IS1.2 percentage 0% 75% 0% 0% 21% capex projects
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment
Increased
access to
services
measured by Performance against
Rand spend on this measure is
IS1.3 Capex Projects R0 R26 Mil R56K R5Mil R4,2 Mil improving
The target has been
achieved however
there is great need
to increase revenue
generated from
operations in order
% Infrastructure to carry out planned
Maintenance of and preventative
IS IS1.4 Revenue 8% 6% 9% 2.5% 9% maintenance.
% alignment of
Influence water supply
Provincial Water schemes to Adequate resources
Infrastructure adequate water at current demand
IS IS2 Sector Planning IS2.1 resources n/a 95% 95.9% 95% 100% levels
Minimise Water losses came
produced and down and the target
distributed water was achieved, but still
to efficiently % total water need some attention
reduce water loss AW Owned in the Debe, Peddie
IS IS3 losses IS3.1 and ROU 15% 12% 11.2% 13% 12% and Laing areas
Upgrade plants No. of plants
to provide commissioned
minimum 5 megs at 5 megs per Nahoon, Sandile,
IS IS4 per day IS4.1 day 4 4 4 4 4 Laing & Peddie
Ensure
uninterrupted
water supply, No. unplanned
with adequate interruptions 99.53% of Assurance
pressure to to supply >24 of Supply was
OR OR1 customers OR1.1 hours 2 0 0 1.47% achieved in Q2
140
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment
Adequate
systems,
structures,
% compliance
with
141
policies and predetermined
processes to KPA timeframes
enable strategy SCM, HR and Systems to measure
OO OO1 implementation OO1.1 SHEQ n/a 75% 0 75% 0 not in place yet
As responsible
public entity
ensure strong
Governance,
Compliance,
Risk and Fraud
Prevention Un-qualified
OO OO2 systems OO2.1 Audit Y Y Y Y Y
Effective
internal controls
During the follow-up
and risk
audit conducted by
management
the internal auditors ,
Internal audit
a total of 102 findings
findings:
were followed up and
Number
: 29 were found to
OO2.2 Repeats n/a 2 70 2 70
have been addressed
Effective ; 27 partially
internal controls addressed and 43
and risk were not addressed.
management This is currently
Internal audit being prioritised.
findings: Information
Number outstanding
OO2.3 unresolved n/a 2 43 2 43

% Compliance
OO2.4 to KING III n/a 50% 67% 50% 67%
% Compliance Currently there is no
to applicable company secretary
legislation in who leads this
OO2.5 Legal register n/a 80% 0% 80% 0% process
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment

%
implementation Draft Strategic Risk
of Integrated register complete.
Risk Framework Risk Committee
and Fraud established and
OO2.6 prevention plan n/a 60% 20% 20% 25% functional
Board member
OO2.7 attendance n/a 80% 83% 80% 67 %

Improved
controls and
risk mitigation,
indicated by
number of
Breaches of
materiality and
significance
OO2.8 framework n/a 0 0 2 0
LEARNING & GROWTH QUADRANT

With increasing
targets and
information
% Achieved of outstanding the
Enhanced the Corporate performance against
Strategic Scorecard scorecard has
LG LG1 Effectiveness LG1.1 Targets 75% 68% 65% 63% reduced
No. of
interactions
between Board
and Executive National Strategy
LG1.2 Authority 2 1 0 1 Session
142
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment
Average Board
Committee
Rating of
143
adequacy of Rating not performed
submissions for quarter 2
LG1.3 (Out of 5) n/a 3 2.4 3 n/a meetings
% MANCO
resolutions
which are
implemented
in prescribed Still setting up
LG1.4 timeframes n/a 90% 0 90% 0 measurements
Divisional
Build Cross- Average performance
Functional Divisional and evidence
Excellence/ Performance requires continued
LG2 Effectiveness LG2.1 Review Scores n/a 3 2 2.5 2 improvement
During the second
% identified quarter 3 additional
critical posts positions were
filled by filled adding up to
predetermined 70.8% of the critical
recruitment positions filled as at
LG2.2 time n/a 80% 58% 60% 70.8% 31 December 2013.
1. Developed draft
No. of PDP guidelines; 2.
organisational Draft policy gap
beneficial analysis report and
Develop schemes 3. Process flows
Operational developed and for learnerships,
Competence successfully recruitment, and job
LG3 (individual) LG3.1 implemented n/a 2 0 1 3 evaluation.
110 employees were
% trained during the
implementation second quarter in line
LG3.2 of PDPs 70 85% 0 10% 31% with the PDPs.
Ob Measure / Y1
WSU No. Objectives Me No. Indicator Base line Target Q1 Actual Q2 Target Q2 Actual Comment

There were 9
terminations during
LG3.3 % Staff Turnover 9% 6% 3.3% 4% 5.88% the 2nd quarter.

110 employees and 17


DWA Total learners were trained;
Number Of the full operation
staff presently of the Learnership
on Training Academy has been
courses, delayed due to the
learner-ships, project charter which
LG3.4 bursaries 21 150 29 25 127 is yet to be approved.
144
Surplus (+)/ Surplus (+)
Raw water Raw water Raw water Raw water Raw water shortfall / shortfall
Capacity in Total firm Urban/ use in use in use in use in use in (-) for (-) for
Dam Mm3 (Live yield Domestic Irrigation Environmental 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2014/2015 2018/2019
Names

Binfield Park
storage) Mm3/a Mm3/a Mm3/a Mm3/a in Mm3/a in Mm3/a in Mm3/a in Mm3/a in Mm3/a in Mm3/a in Mm3/a
145
Dam 36.850 16.500 1.000 8.000 0.000 3.220 3.253 3.253 4.146 4.261 5.280 4.239

Cata Dam 12.100 6.200 0.000 5.300 0.000 0.000 0.000 0.000 0.000 0.000 0.900 0.900

Dabi Dam 1.000 0.050 0.033 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.050 0.050

Debe Dam 6.000 2.150 0.350 0.000 0.000 0.818 0.826 1.337 1.401 1.465 1.332 0.685

Gubu Dam 8.800 2.870 2.300 0.783 0.000 1.753 1.770 1.788 1.806 1.824 0.334 0.263

Laing Dam 19.800 18.270 14.900 1.900 0.000 10.111 10.212 10.708 10.865 10.914 6.259 5.456

Mnyameni
Dam 2.060 4.000 0.450 0.700 0.000 0.961 0.970 1.263 1.301 1.338 2.339 1.962

Nahoon Dam 19.900 8.410 5.600 1.250 0.900 13.065 13.430 16.350 17.080 17.810 -6.805 -11.550

Pleasant View
Annexure E - Ma jor Dam Yields

Dam 2.000 0.000 0.030 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

Rooikrantz /
Maden Dam 4.800 4.180 3.100 1.240 0.000 4.757 4.804 4.852 4.901 4.950 -1.817 -2.010

Sandile Dam 30.960 18.000 11.600 6.800 0.000 9.915 10.014 13.590 14.028 14.466 1.285 -3.266
Wriggleswade
Dam 91.210 31.800 16.900 3.000 0.000 0.000 0.000 0.000 0.000 0.000 28.800 28.800

Glen Boyd
Balance Dam 0.150 1.000 0.000 0.000 0.000 0.260 0.262 0.265 0.268 0.270 0.740 0.730

Albany Coast 0.520 0.802 0.000 0.000 0.826 0.835 0.843 0.851 0.860 -0.306 -0.340

Total 235.63 113.950 57.065 23.173 3.900 45.685 46.376 54.249 56.646 58.158 38.392 25.919

% of Firm Yield
for domestic use 50% 20% 3% 40.1% 40.7% 47.6% 49.7% 51.0% 33.7% 22.7%

% of Firm Yield
for all uses 74% 63.9% 64.5% 71.4% 73.5% 74.8% 57.5% 46.5%
146
Annexure F - High Level Organogram

Chief Executive

Company
Secretary

Director: Director: Director: Director:


Finance Corporate Services Operations Planning & Development
Estimated
Growth %
Actual Actual Projected Budget Budget Budget Budget
2012/2013 Account 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2014/2013 2019/2013

39 565 000 Water sold (kilolitres)

7 842 000 - Raw water sales (kl)


42 128 035

8 411 081
42 549 315

8 495 191
43 174 803

8 534 420
51 799 041

8 618 892
53 461 810

8 704 209
55 127 573

8 790 379
6.48

7.26
5.68

1.92
147
31 723 000 - Potable water sales (kl) 33 716 954 34 054 124 34 640 383 43 180 149 44 757 601 46 337 194 6.29 6.52

- Waste water sales (kl)


TOTAL REVENUE (Primary
352 521 000 and secondary activities) 390 609 329 361 146 016 393 969 657 495 120 332 522 847 071 552 126 507 10.80 7.76
Revenue (Primary
195 056 000 activity) 258 917 877 280 779 905 309 862 947 407 398 107 421 182 026 435 084 494

11 192 000 - Raw water sales 14 024 729 14 609 665 16 200 334 21 752 479 22 426 806 23 122 037 25.31 12.85
Statement of Comprehensive Income

183 864 000 - Potable water sales 244 893 148 237 493 699 263 351 509 353 606 791 364 922 209 376 234 797 33.19 12.67

- Waste water sales

- Industrial water sales


- Wastewater
Annexure G - Financial Model

management fee

- Right of use (ROU) 28 676 541 30 311 104 32 038 837 33 833 012 35 727 661
Revenue (Secondary
157 465 000 activity) 131 691 452 80 366 111 84 106 710 87 722 225 101 665 044 117 042 012 (16.37) (4.82)

- Retail water operation


Waste water
management fee
- Management fee -
consulting

- Management fee - other

157 465 000 - Section 30 activities 131 691 452 80 366 111 84 106 710 87 722 225 101 665 044 117 042 012 (16.37) (4.82)

147 281 000 TOTAL COST OF SALES 144 000 186 143 981 771 148 197 714 172 322 829 176 798 618 176 410 483 (2.23) 3.05
Cost of sales (raw water
56 665 000 purchased) 63 006 959 72 338 645 80 295 896 107 596 500 114 727 806 114 727 806 11.19 12.48

56 665 000 - Raw water 63 006 959 72 338 645 80 295 896 107 596 500 114 727 806 114 727 806 11.19 12.48
Cost of sales (secondary
90 616 000 activities) 80 993 227 71 643 126 67 901 818 64 726 329 62 070 811 61 682 676 (10.62) (6.21)
Estimated
Growth %
Actual Actual Projected Budget Budget Budget Budget
2012/2013 Account 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2014/2013 2019/2013

41 948 000 - Employee costs 37 753 200 33 977 880 30 580 092 27 522 083 24 769 875 22 292 887 (10.00) (10.00)
- Chemicals and
6 797 000 purification 5 446 740 5 751 758 6 073 856 6 413 992 6 773 176 7 152 474 (19.87) 0.85

1 307 000 - Energy 1 176 300 1 242 173 1 311 734 1 385 192 1 462 762 1 544 677 (10.00) 2.82
- Repairs and
24 957 000 maintenance 22 461 300 15 722 910 14 150 619 12 735 557 11 462 001 12 103 873 (10.00) (11.36)
- General and
15 607 000 administration expenses 14 046 300 14 832 893 15 663 535 16 540 693 17 466 972 18 445 122 (10.00) 2.82

-Project / WIP costs


- Other direct operating
activities 109 387 115 513 121 981 128 812 136 026 143 643

205 240 000 GROSS INCOME 246 609 143 217 164 245 245 771 943 322 797 503 346 048 453 375 716 024 20.16 10.60

58.2 Gross profit % 63.1 60.1 62.4 65.2 66.2 68.0 8.44 2.63
- Gross profit % - primary
70.9 activity 75.7 74.2 74.1 73.6 72.8 73.6 6.65 0.62
- Gross profit % -
42.5 secondary activity 38.5 10.9 19.3 26.2 38.9 47.3 (9.32) 1.82
Government grants and
other funding

Other operating income 5 353 107 2 736 000 2 891 952 3 056 793 3 196 183 3 341 929
- Commission income and
insurance
- Game and grazing sales
(net of expenses)
- House and other rentals
- all related income

- Other income (scrap,


telephone, refurbishment,
lab) 5 353 107 2 736 000 2 891 952 3 056 793 3 196 183 3 341 929

- Project income

- Bad debts recovered


- Profit Loss) on sale of
fixed assets
- Profit (loss) on disposal
of investments
148
Estimated
Growth %
Actual Actual Projected Budget Budget Budget Budget
2012/2013 Account 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2014/2013 2019/2013
- Profit (loss) on sale of
biological assets
- Profit Loss) on sale of
intangible assets
149
- Wastewater - Darville
revenue amort
TOTAL OPERATING
205 240 000 INCOME 251 962 250 219 900 245 248 663 895 325 854 296 349 244 636 379 057 953 22.76 10.77

191 303 762 TOTAL EXPENSES 206 939 826 221 729 322 248 417 208 291 772 165 308 431 162 328 111 941 8.17 9.41
- Variable costs (related
139 556 000 to cost of sales) 159 521 836 172 080 329 186 300 033 216 341 853 232 396 126 249 664 465 14.31 10.18

80 653 000 - Employee costs 84 642 556 91 413 960 98 727 077 106 625 243 115 155 263 124 367 684 4.95 7.48
- Directors emoluments (
include in general)
- Employee salaries -
(including leave, annual
80 653 000 bonus, 13th cheque) 68 468 521.71 73 946 003 79 861 684 86 250 618 93 150 668 100 602 721 (15.11) 3.75

- Performance bonuses 4 108 111 4 436 760 4 791 701 5 175 037 5 589 040 6 036 163
- Company contributions
- Medical contributions
and expenses 6 277 598 6 779 806 7 322 190 7 907 965 8 540 602 9 223 851
- Company contribution -
UIF and SDL 463 927 501 041 541 124 584 414 631 167 681 661
- Contributions to pension
and provident funds 5 324 398 5 750 350 6 210 378 6 707 208 7 243 785 7 823 288

- OID contributions
- Changes in post
employment liabilities

10 418 000 - Chemicals 15 079 208 15 973 737 16 884 240 17 846 642 18 846 054 19 901 433 44.74 11.39

26 133 000 - Energy 30 604 986 33 766 289 37 999 779 57 317 983 61 903 421 66 855 695 17.11 16.95
- Repairs and
maintenance - (cost of
9 878 000 sales related) 14 226 319 15 035 600 15 881 614 16 775 234 17 719 139 18 716 158 44.02 11.24

- Property and buildings 3 795 151 4 020 287 4 249 443 4 491 662 4 747 686 5 018 304
- Plant, machinery and
9 878 000 equipment 10 431 168 11 015 313 11 632 171 12 283 573 12 971 453 13 697 854 5.60 5.60
Estimated
Growth %
Actual Actual Projected Budget Budget Budget Budget
2012/2013 Account 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2014/2013 2019/2013
- Other - to be included in
general expenses

12 474 000 - Depreciation 14 771 578 15 682 510 16 587 429 17 544 544 18 527 039 19 564 553 18.42 7.79
- Depreciation property,
12 474 000 plant and equipment 14 771 578 15 682 510 16 587 429 17 544 544 18 527 039 19 564 553 18.42 7.79
- Amortisation of
intangible assets
- Impairments of
property, plant and
equipment
- impairments of
intangible assets
- Impairment of trade
receivables

- Other direct costs 197 189 208 232 219 893 232 207 245 210 258 942
- Motor vehicle repairs
and running expenses 197 189 208 232 219 893 232 207 245 210 258 942

- Other direct

51 747 762 - General expenses 47 417 990 49 648 993 62 117 175 75 430 312 76 035 036 78 447 476 (8.37) 7.18
- Advertising and
promotions
- Amortisation - office
intangibles
- Amortisation of
biological assets

1 065 000 - Audit fees 705 000 744 480 786 171 830 196 876 687 925 782 (33.80) (2.31)

5 411 000 - Bad debts 2 526 767 2 668 266 2 817 689 2 975 479 3 142 106 3 318 064 (53.30) (7.83)
- Bursaries, donations and
gifts
- Cleaning - all
administration areas
- Computer and IT
33 775 consumables 59 568 62 904 66 426 70 146 74 074 78 223 76.37 15.02
- Conferences, seminars
and workshops 225 429 238 053 251 384 265 461 280 327 296 025
- Consultants and
5 998 000 professional fees 5 685 578 6 003 970 10 340 192 13 695 243 11 070 177 8 732 618 (5.21) 6.46
150
Estimated
Growth %
Actual Actual Projected Budget Budget Budget Budget
2012/2013 Account 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2014/2013 2019/2013

- Contractors

- Courier and postage 43 713 46 160 48 745 51 475 54 358 57 402


151
- Depreciation of office
207 000 assets 299 733 316 518 334 243 352 960 372 726 393 599 44.80 11.30
- Directors - performance
542 000 bonuses 561 605 593 055 626 266 661 337 698 372 737 481 3.62 5.27

- Directors emoluments
- Employee costs
- (related to
administration)
- Energy - related to
administration areas
- Impairments of
biological assets

- Insurance

9 311 000 - Lease costs 8 485 270 8 960 445 9 462 230 9 992 115 10 551 674 11 142 567 (8.87) 3.04

- Legal and contract fees 393 891 415 949 439 243 463 840 489 815 517 245
- Marketing - not
advertising and
promotions 87 010 91 883 97 028 102 462 108 200 114 259
- Motor vehicle expenses
12 100 000 (not in direct costs) 8 646 469 10 466 583 13 442 573 17 971 357 17 529 753 18 119 419 (28.54) 6.96
- Operating leases -
photocopiers etc 214 817 226 847 239 550 252 965 267 131 282 091
- Other operating
expenses

340 291 - Printing and stationery 335 673 354 470 374 321 395 283 417 418 440 794 (1.36) 4.41
- Protective clothing and
593 807 uniforms 585 747 618 549 653 188 689 767 728 394 769 184 (1.36) 4.41

789 115 - Rates and taxes 778 404 821 995 868 026 916 636 967 967 1 022 174 (1.36) 4.41
- Relocation costs - all
items

- Rent paid - equipment


681 445 hire and other hiring costs 672 195 709 838 749 589 791 566 835 894 882 704 (1.36) 4.41
- Repairs and
9 878 000 maintenance 11 284 080 10 155 672 14 022 367 17 090 195 20 323 873 22 965 976 14.23 15.10
Estimated
Growth %
Actual Actual Projected Budget Budget Budget Budget
2012/2013 Account 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2014/2013 2019/2013

305 000 - Safety and security 1 087 258 1 148 145 1 212 441 2 280 338 1 352 036 1 427 750 #REF! 29.34

- Service contracts
- Software and other
55 994 small assets expensed 59 568 62 904 66 426 70 146 74 074 78 223 6.38 5.73

140 249 - Staff welfare 146 093 154 274 162 914 172 037 181 671 191 845 4.17 5.36
- Subscriptions, licences
370 258 and membership fees 393 891 415 949 439 243 463 840 489 815 517 245 6.38 5.73
- Training and
680 631 development 708 991 748 694 790 621 834 896 881 650 931 023 4.17 5.36

641 224 - Telephone and fax 661 056 698 075 737 167 778 449 822 042 868 076 3.09 5.18
- Travel and
2 603 972 entertainment 2 770 183 2 925 313 3 089 131 3 262 122 3 444 801 3 637 710 6.38 5.73
- Veterinary services,
supplies and biological
costs
OPERATING PROFIT
13 936 238 (LOSS) FOR YEAR 45 022 424 -1 829 077 246 688 34 082 131 40 813 474 50 946 012 223.06 24.12
Finance income - (enter
7 195 000 as positive) 3 793 214 4 512 000 4 769 184 5 041 027 5 323 474 5 621 749 (47.28) (4.03)

- Trade receivables 13 821 14 719 15 676 16 695 17 780 18 935


- Extended payment trade
receivables - deemed
interest
- Short term deposits -
7 195 000 call accounts 3 779 393 4 497 281 4 753 508 5 024 332 5 305 695 5 602 813 (47.47) (4.08)
- Held to maturity
financial assets
- Available for sale
investments

- Employee advances

- SARS

- Other
Finance costs - (enter as
3 952 000 negative) -38 736 -36 240 -38 306 -40 489 -44 126 -48 090 (100.98) #NUM!

3 952 000 - Long term borrowings -38 559 -36 054 -38 109 -40 281 -43 906 -47 858 (100.98) #NUM!
152
Estimated
Growth %
Actual Actual Projected Budget Budget Budget Budget
2012/2013 Account 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2014/2013 2019/2013

- Bank overdraft

- SARS
-177 -186 -197 -208 -220 -232
153
- Finance leases
- Borrowing costs
capitalised (positive)

- Other

25 083 238 PROFIT (LOSS) FOR YEAR 48 776 902 2 646 682 4 977 565 39 082 669 46 092 822 56 519 671 94.46 14.50
Other comprehensive
income
- Gain on revaluation
of property, plant and
equipment
- Gain on revaluation of
intangible assets
- Transfers (to) from
general reserves
- Gains / (losses) on
retirement benefit plans
TOTAL COMPREHENSIVE
INCOME (LOSS) FOR THE
25 083 238 YEAR 48 776 902 2 646 682 4 977 565 39 082 669 46 092 822 56 519 671 94.46 14.50
Estimated
Growth %
Actual Actual Projected Budget Budget Budget Budget
2012/2013 Account 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2014/2013 2019/2013

ASSETS

Non-current assets
Property, plant and
292 525 000 equipment 323 238 264 374 848 628 433 121 491 466 887 656 500 633 878 533 143 790 10.50 10.52
Carrying value - opening
458 711 000 balance 292 525 000 323 238 264 374 848 628 433 121 491 466 887 656 500 633 878 (36.23) 1.47
Additions - (will be
13 740 000 carried to cashflow) 49 587 399 71 440 141 81 696 165 62 752 243 65 000 000 65 000 000 260.90 29.57
Depreciation - ( ex
-173 344 000 income statement) -15 071 310 -15 999 028 -16 921 671 -17 897 505 -18 899 765 -19 958 152 (91.31) (30.25)
Statement of Financial Position

-6 582 000 Disposals - carrying value -3 802 825 -3 830 750 -6 501 631 -11 088 572 -12 354 013 -12 531 937 (42.22) 11.33
Impairments - (ex income
statement)
Revaluations - (ex income
statement)

Interest capitalised

Intangible assets
Carrying value - opening
balance
Additions - (will be
carried to cashflow)
Amortisation - (ex income
statement)

Disposals - carrying value


Impairments - (ex income
statement)
Revaluations - (ex income
statement)

Biological assets
Carrying value - opening
balance
Additions - (will be
carried to cashflow)
Amortisation - (ex income
statement)

Disposals - carrying value


154
Estimated
Growth %
Actual Actual Projected Budget Budget Budget Budget
2012/2013 Account 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2014/2013 2019/2013
Impairments - (ex income
statement)
Investments in
subsidiaries and
155
associates

Opening balance

Changes in year
Investments - financial
instruments

Held to maturity

Loans receivable

Employee loans

Other financial assets

General

292 525 000 323 238 264 374 848 628 433 121 491 466 887 656 500 633 878 533 143 790 10.50 10.52

Assets held for sale - net

Dams

Farms

Reservoirs

Other

Current assets

Investments

Short term

Available for sale

1 585 000 Inventories 1 675 345 1 769 164 1 770 840 1 870 007 1 871 778 1 976 597 5.70 3.75
Estimated
Growth %
Actual Actual Projected Budget Budget Budget Budget
2012/2013 Account 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2014/2013 2019/2013

1 386 000 Piping 1 465 002 1 547 042 1 548 507 1 635 224 1 636 772 1 728 431 5.70 3.75

Electrical

Maintenance spares

Water

167 000 Chemical stores 176 519 186 404 186 581 197 029 197 216 208 260 5.70 3.75

32 000 Consumables 33 824 35 718 35 752 37 754 37 790 39 906 5.70 3.75

Miscellaneous

284 929 000 Trade receivables 279 134 931 297 627 229 317 369 919 351 935 558 387 243 960 415 276 028 (2.03) 6.48
Trade receivables - bulk
47 552 000 and waste water 46 603 352 51 728 977 57 356 462 77 016 443 86 944 454 97 814 846 (1.99) 12.77
Trade receivables - other
243 536 000 activities 238 690 579 252 057 251 266 172 458 281 078 115 306 458 506 323 620 182 (1.99) 4.85
less: provision for
doubtful debts /
-6 159 000 impairments - balance b/f -6 159 000 -6 159 000 -6 159 000 -6 159 000 -6 159 000 -6 159 000
Change in prov -
doubtful/impairments - ex
income statement

Sundry debtors

Interest receivable
Loans and financial
receivables

Employee loans

Other loans
Cash and cash
106 402 000 equivalents 112 360 512 118 652 701 118 652 701 125 297 252 125 297 252 132 313 898 5.60 3.70

34 276 000 Cash on hand 36 195 456 38 222 402 38 222 402 40 362 856 40 362 856 42 623 176 5.60 3.70

Bank current account

72 126 000 Short term deposits 76 165 056 80 430 299 80 430 299 84 934 396 84 934 396 89 690 722 5.60 3.70
156
Estimated
Growth %
Actual Actual Projected Budget Budget Budget Budget
2012/2013 Account 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2014/2013 2019/2013

392 916 000

685 441 000 TOTAL ASSETS


393 170 788

716 409 051


418 049 094

792 897 721


437 793 459

870 914 950


479 102 816

945 990 473


514 412 989

1 015 046 867


549 566 523

1 082 710 313


0.06

4.52
5.75

7.92
157
EQUITY AND LIABILITIES

Capital and reserves

274 557 000 Capital 274 557 000 274 557 000 274 557 000 274 557 000 274 557 000 274 557 000

Reserves

Opening balance

Transfers in (out)

20 045 000 Accumulated profit (loss) 68 821 902 71 468 584 76 446 149 115 528 818 161 621 640 218 141 311 243.34 48.86

-5 038 000 Opening balance 20 045 000 68 821 902 71 468 584 76 446 149 115 528 818 161 621 640 (497.88) #NUM!
Comprehensive income
(loss) for year - (ex
25 083 000 income statement) 48 776 902 2 646 682 4 977 565 39 082 669 46 092 822 56 519 671 94.46 14.50

Other

294 602 000 343 378 902 346 025 584 351 003 149 390 085 818 436 178 640 492 698 311 16.56 8.95

Non-current liabilities

10 448 000 Long term debt 883 800 795 420 795 420 715 878 5 715 878 5 644 290 (91.54) (9.75)

Bank loan - fixed rate

Bank loan - variable rate 5 000 000 5 000 000

Bonds - fixed rate

982 000 Bonds - variable rate 883 800 795 420 795 420 715 878 715 878 644 290 (10.00) (6.78)

Loans - interest free

7 858 000 Settlement agreements (100.00) (100.00)


Income received in
advance
Estimated
Growth %
Actual Actual Projected Budget Budget Budget Budget
2012/2013 Account 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2014/2013 2019/2013

1 608 000 Finance lease obligation (100.00) (100.00)


Other non-current
liabilities
Post retirement benefit
obligations
Defined benefit and
contribution plans -
opening
Actuarial movement
on defined benefit
contribution

- Healthcare benefits

10 448 000 883 800 795 420 795 420 715 878 5 715 878 5 644 290 (91.54) (9.75)

Current liabilities
Current portion of long
26 441 000 term loans 7 858 000 50 000 100 000 (70.28) (60.53)

Bank loan - fixed rate 50 000 100 000

Bank loan - variable rate

Bonds - fixed rate

Bonds - variable rate

Loans - interest free

26 441 000 Settlement agreements 7 858 000 (70.28) (100.00)


Income received in
advance

Finance lease obligations

Interest payable

217 136 000 Trade and other payables 238 095 573 330 208 307 412 396 827 457 091 101 482 688 202 500 688 315 9.65 14.94

217 136 000 Trade payables 238 095 573 330 208 307 412 396 827 457 091 101 482 688 202 500 688 315 9.65 14.94
Trade payables - related
parties
158
Estimated
Growth %
Actual Actual Projected Budget Budget Budget Budget
2012/2013 Account 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2014/2013 2019/2013
Statutory payables -
employees tax / benefits
funds 159
SARS - VAT
Amounts received in
advance

Accrual - audit fees

Accruals - other

124 967 000 Other payables / loans 112 470 300 101 223 270 91 100 943 81 990 849 73 791 764 66 412 587 (10.00) (10.00)

11 847 000 Provisions 13 722 477 14 645 140 15 618 611 16 106 827 16 622 382 17 166 809 15.83 6.38

Leave pay

4 029 000 Bonuses 5 904 477 6 389 332 6 900 478 6 900 478 6 900 478 6 900 478 46.55 9.38
Legal fees - costs and
claims

7 818 000 Other 7 818 000 8 255 808 8 718 133 9 206 349 9 721 904 10 266 331 4.65

Bank overdraft

Current account 1

Current account 2

Current account 3

380 391 000 372 146 350 446 076 717 519 116 381 555 188 776 573 152 349 584 367 711 (2.17) 7.42

685 441 000 Total equity and liabilities 716 409 052 792 897 721 870 914 950 945 990 473 1 015 046 867 1 082 710 313 4.52 7.92
Estimated Growth %
Actual Actual Projected Budget Budget Budget Budget
2012/2013 Account 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2014/2013 2019/2013

OPERATING ACTIVITIES
Net profit for period
25 083 000 before changes 48 776 902 2 646 682 4 977 565 39 082 669 46 092 822 56 519 671 94.46 14.50
Adjustments for non-cash
16370000 items, interest and other 11 316 832 11 523 269 12 190 794 12 896 967 13 620 416 14 384 493 (30.87) (2.13)
- Depreciation and

Statement of Cashflow
12680000 amortisation 15 071 310 15 999 028 16 921 671 17 897 505 18 899 765 19 958 152 18.86 7.85
- Impairments of PPE,
intangibles and biological
assets
- Retirement benefits
provisions
- Profit (loss) on sale
of fixed, intangible and
1000 biological assets (100.00) (100.00)
- Interest received -
3952000 (deduct from profit) -3 793 214 -4 512 000 -4 769 184 -5 041 027 -5 323 474 -5 621 749 (195.98) #NUM!
- Interest paid - (add to
(263000) profit) 38 736 36 240 38 306 40 489 44 126 48 090 (114.73) #NUM!

- Revaluations of assets
- Impairment of trade
receivables

34115000 Adjustments for:

- Discontinued operations
- other non cashflow
34115000 adjutments

(17532000) Working capital changes 28 538 774 74 449 279 63 417 625 10 517 684 -9 197 516 -9 592 349 (262.78) (9.56)

22000 - Inventories -90 345 -93 819 -1 675 -99 167 -1 771 -104 820 (510.66) #NUM!

(153855000) - Trade debtors 5 794 069 -18 492 298 -19 742 690 -34 565 639 -35 308 402 -28 032 068 (103.77) (24.71)

- Sundry debtors
- Trade and other
132272000 payables 20 959 573 92 112 734 82 188 519 44 694 274 25 597 102 18 000 112 (84.15) (28.28)

4029000 - Provisions 1 875 477 922 663 973 472 488 215 515 556 544 427 (53.45) (28.37)
Net cash generated from
58036000 operating activities 88 632 508 88 619 230 80 585 984 62 497 320 50 515 723 61 311 814 52.72 0.92
160
Estimated Growth %
Actual Actual Projected Budget Budget Budget Budget
2012/2013 Account 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2014/2013 2019/2013
INVESTING ACTIVITIES -
(7328000) NET CASH UTILISED
- Additions to property,
-45 784 574 -67 609 392 -75 194 534 -51 663 670 -52 645 987 -52 468 063 524.79 38.83 161
(7328000) plant and equipment -49 587 399 -71 440 141 -81 696 165 -62 752 243 -65 000 000 -65 000 000 576.68 43.88
- Additions to intangible
assets
- Additions to biological
assets
- Proceeds on disposal
of fixed and intangible
assets 3 802 825 3 830 750 6 501 631 11 088 572 12 354 013 12 531 937
- Proceeds on disposal of
biological assets
- Investments in
subsidiaries and
associates
- Interest receivable
movement
- Movement in assets held
for sale
- Increase (decrease) in
capital
FINANCING ACTIVITIES -
930000 NET CASH UTILISED -36 889 422 -14 717 651 -5 391 449 -4 189 099 2 130 264 -1 827 105 (4066.60) #NUM!
- Movement in long term
(1016000) borrowings -9 564 200 -88 380 -79 542 5 000 000 -71 588 841.36 (35.73)
- Movement in
investments
- Proceeds (repayment)
1946000 short term borrowings -18 583 000 -7 858 000 50 000 50 000 (1054.93) (45.68)
- Movement in loan
receivables -12 496 700 -11 247 030 -10 122 327 -9 110 094 -8 199 085 -7 379 176

- Interest received 3 793 214 4 512 000 4 769 184 5 041 027 5 323 474 5 621 749

- Interest paid -38 736 -36 240 -38 306 -40 489 -44 126 -48 090
- Movement in retirement
benefit obligations
- Adjustment for non-cash
interest
CASH AND CASH
EQUIVALENTS
Estimated Growth %
Actual Actual Projected Budget Budget Budget Budget
2012/2013 Account 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2014/2013 2019/2013

- Net increase (decrease)


in cash utilised for the
51638000 year 5 958 512 6 292 188 1 6 644 551 -0 7 016 646 (88.46) (28.30)

54764000 - At beginning of year 106 402 000 112 360 512 118 652 701 118 652 701 125 297 252 125 297 252 94.29 14.79

106 402 000 - AT END OF YEAR 112 360 512 118 652 700 118 652 702 125 297 251 125 297 252 132 313 898 5.60 3.70

-0 1 -1 0 0 0
- end of year per balance
106402000 sheet 112 360 512 118 652 701 118 652 701 125 297 252 125 297 252 132 313 898
162
Growth %
Actual Estimated Actual Projected Budget Budget Budget Budget
2012/2013 Capex Category 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2013/2014 2019/2013

Immovable capex
Augmentation and
upgrade 48 538 380 48 147 841 57 061 351 36 697 500
163
Expansion 35 000 000 35 000 000

10014000 Rehabilitation (100.00) (100.00)

Development projects

10014000 48 538 380 48 147 841 57 061 351 36 697 500 35 000 000 35 000 000 384.71 23.19 Capital Expenditure Program
Movable capex

3726000 Equipment and vehicles 1 049 019 23 292 300 24 634 814 26 054 743 30 000 000 30 000 000 (71.85) 41.57
Information technology
communication
Laboratory and process
services

3726000 1 049 019 23 292 300 24 634 814 26 054 743 30 000 000 30 000 000 (71.85) 41.57

Summary

10014000 Immovable capex 48 538 380 48 147 841 57 061 351 36 697 500 35 000 000 35 000 000 384.71 23.19

3726000 Movable capex 1 049 019 23 292 300 24 634 814 26 054 743 30 000 000 30 000 000 (71.85) 41.57

13740000 49 587 399 71 440 141 81 696 165 62 752 243 65 000 000 65 000 000 260.90 29.57

% of total 12.5% 18.1% 20.7% 15.9% 16.4% 16.4%


Total forecast period -
2014 to 2019 395 475 948 30.6% 38.7% 36.5% 32.3% 32.9%

Reconciliation

13740000 Capex above 49 587 399 71 440 141 81 696 165 62 752 243 65 000 000 65 000 000 260.90 29.57
Capitalised fixed assets -
-13 740 000 per fixed assets entry -49 587 399 -71 440 141 -81 696 165 -62 752 243 -65 000 000 -65 000 000 260.90 29.57
Capitalised intangibles -
per intangibles entry

Written off to expenses

Difference -0 -0 -0 0

Cumulative difference -0 -0 -1 -0 -0 -0
Growth %
Actual Estimated Actual Projected Budget Budget Budget Budget
2012/2013 Category 2013/2014 2014/2015 2015/2016 2016/2017 2017/2018 2018/2019 2013/2014 2019/2013

Performance indicators
- Cost of raw water /
0.291 primary revenue 0.243 0.258 0.259 0.264 0.272 0.264 (16.23) (1.60)

Financial Ratios
- Cost of sales / total
0.814 revenue 0.777 0.875 0.849 0.785 0.783 0.772 (4.50) (0.88)
- General expenses / total
0.147 revenue 0.121 0.137 0.158 0.152 0.145 0.142 (17.30) (0.54)
- Employees costs / per
2052.193 megalitre 2022.505 2162.362 2301.188 2071.208 2167.035 2269.376 (1.45) 1.69
- Employee costs / total
0.240 costs excl finance costs 0.243 0.252 0.251 0.231 0.239 0.248 1.24 0.56
- Operating profit (loss)
per employee

- Total staff complement

- Management

- Other

Operating risks
- Debtors days (trade
debtors excl VAT/ revenue
264.4 x 365 days) 233.9 269.3 262.9 231.6 240.9 244.4 (11.55) (1.30)
- Return on assets (EBIT
/ total assets excluding
2.0% investments) 6.3% 0.0% 3.6% 4.0% 4.7% 209.10 15.01

Financial risks
- Current ratio (current
1.033 assets / current liabilities) 1.056 0.937 0.843 0.863 0.898 0.940 2.28 (1.55)
- Gross debt / equity ratio
(total debt liabilities /
0.125 total equity) 0.025 0.002 0.002 0.002 0.013 0.012 (79.67) (32.68)
- Debt / assets ratio (total
0.054 debt / total assets) 0.012 0.001 0.001 0.001 0.006 0.005 (77.33) (32.03)

Business credit risk


- interest cover (EBIT /
interest paid) 1162.302 (50.471) 6.440 841.764 924.933 1059.395

Surplus ratios
- Return on turnover (net
0.07 profit / turnover ) 0.12 0.01 0.01 0.08 0.09 0.10 75.50 6.25
164
Projects Proposed Funding Source Growth Strategy Plan Projection

Amatola Loan National Total 2014 2015 2016 2017 2018 2019
Water Treasury Grant Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Nahoon BWS
Reserves
165
Upgrade WTW R- R- R 12 925 313 R 12 925 313 R 1 002 825 R 12 925 313

Sub-total R- R- R 12 925 313 R 12 925 313 R 1 002 825 R 12 925 313 R- R- R- R-

Sandile BWS

Upgrade Reservoirs R- R- R 16 770 000 R 16 770 000 R- R- R 16 080 000 R 690 000 R- R-

Upgrade Bulk
R- R- R 159 130 200 R 159 130 200 R- R- R 152 230 200 R 6 900 000 R- R-
distribution

Upgrade WTW R- R- R 65 667 568 R 65 667 568 R 8 817 232 R 62 167 568 R 3 500 000 R- R- R-

Upgrade pump
R- R- R 2 633 000 R 2 633 000 R- R- R 2 508 000 R 125 000 R- R-
stations

Sub-total R- R- R 244 200 768 R 244 200 768 R 8 817 232 R 62 167 568 R 174 318 200 R 7 715 000 R- R-

Peddie BWS

Upgrade Bulk
R- R- R 23 540 000 R 23 540 000 R 1 614 240 R 22 420 000 R 1 120 000 R- R- R-
distribution

Reservoirs R- R- R- R- R- R- R- R- R- R-
Annexure H - 5 Year Capex Programme

Upgrade WTW R- R- R- R- R- R- R- R- R- R-

Upgrade pump
R- R- R- R- R- R- R- R- R- R-
stations

Sub-total R- R- R 23 540 000 R 23 540 000 R 1 614 240 R 22 420 000 R 1 120 000 R- R- R-

Debe Nek BWS

Upgrade Bulk
R- R- R 10 360 000 R 10 360 000 R- R- R 8 260 000 R 2 100 000 R- R-
distribution

Upgrade Reservoirs R- R- R 2 476 000 R 2 476 000 R- R- R 2 360 000 R 116 000 R- R-

Upgrade WTW R- R- R 26 613 750 R 26 613 750 R 550 000 R 20 060 000 R 6 238 750 R 315 000 R- R-
Projects Proposed Funding Source Growth Strategy Plan Projection

Amatola Loan National Total 2014 2015 2016 2017 2018 2019
Water Treasury Grant Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Reserves

Upgrade pump
R- R- R 1 858 500 R 1 858 500 R- R- R 1 770 000 R 88 500 R- R-
stations

Sub-total R- R- R 41 308 250 R 41 308 250 R 550 000 R 20 060 000 R 18 628 750 R 2 619 500 R- R-

Binfield BWS

Upgrade Bulk
R- R- R 51 185 960 R 51 185 960 R 451 440 R 5 818 560 R 43 217 400 R 2 150 000 R- R-
distribution

Upgrade Reservoirs R- R- R 8 361 400 R 8 361 400 R 615 600 R 7 934 400 R 427 000 R-

Upgrade WTW R- R- R 29 842 000 R 29 842 000 R 750 000 R 3 842 000 R 25 000 000 R 1 000 000 R- R-

Upgrade pump
R- R- R 2 993 000 R 2 993 000 R- R- R 2 850 000 R 143 000
stations

Sub-total R- R- R 92 382 360 R 92 382 360 R 1 817 040 R 17 594 960 R 71 494 400 R 3 293 000 R- R-

Masincedane BWS

Upgrade Bulk
R- R- R 58 910 001 R 58 910 001 R- R- R 56 460 001 R 2 450 000 R- R-
distribution

Upgrade Reservoirs R- R- R 9 910 000 R 9 910 000 R- R- R 9 440 000 R 470 000 R- R-

Upgrade WTW R- R- R 13 630 000 R 13 630 000 R 450 000 R 12 980 000 R 650 000 R- R- R-

Upgrade pump
R- R- R 3 100 000 R 3 100 000 R- R- R 2 950 000 R 150 000 R- R-
stations

Sub-total R- R- R 85 550 001 R 85 550 001 R 450 000 R 12 980 000 R 69 500 001 R 3 070 000 R- R-

Total R- R- R 499 906 692 R 499 906 692 R 14 251 337 R 148 147 841 R 335 061 351 R 16 697 500 R- R-
166
167
Annexure I - Bank Account Details

Bank Accounts Account Number Branch Branch Number

Standard Bank

Current Accounts

Cheque - Current 081075138 East London 050021

Cheque - Current 080002277 Port Elizabeth 050017

Cheque - Salary 081076533 East London 050021

Cheque - DOE Projects 081180616 East London 050021

Call Accounts

Daily Call 088594866-1 East London 050021

Daily Call 088594866-2 East London 050021

Daily Call 088594866-3 East London 050022

Daily Call 088420124-2 Port Elizabeth 050017

Market Link 655728821 Port Elizabeth 050017

Stanlib

Call Accounts

Daily Call 54781016 Melrose

Daily Call 75144785 Melrose

Nedbank

Current Accounts

Cheque - Current 1210394685 East London 121021

Call Accounts

Daily Call 7210519319 East London 121021


Contact Details

Private Ba g X3, Vincent, 5217


Amatola House, 6 Lancaster Road, Vincent, 5247
Tel: (043) 709 3700
Fax: (043) 707 3701
Email: aw@amatolawater.co.za
www.amatolawater.co.za