DWA CONSOLIDATED REPORT ON THE PERFORMANCE OF THE TRANS CALEDON TUNNEL AUTHORITY (TCTA) AND THE WATER RESEARCH

COMMISSION (WRC):2011/12 FINANCIAL YEAR

Prepared for the Minister of Water and Environmental Affairs and

the Portfolio Committee on Water and Environmental Affairs

PURPOSE

The purpose of this presentation is to provide a consolidated strategic overview of the performance of the Trans Caledon Tunnel Authority (TCTA) and the Water Research Commission (WRC) for the 2011-12 financial year both from an institutional performance and financial performance perspective.

3

Quartely reporting Annual ReportsEntities reporting to Portfolio Committee –once a year .

Performance Monitoring &

Evaluation

The shareholder management process

NWRI WB2+1WB2+1

WB 3

WB 3

Reporting and Governance

CMA 9

CMA 9

CMA 2

CMA 2

CMA 1

CMA 1

Water

board 3

Water

board 3

TCTA TCTA

MinisterMinister

DWAInstitutional

oversight (national &

regional)

DWAInstitutional

oversight (national &

regional)

ParliamentParliament

Public institutions report to the public and Parliament through Annual Reports and Annual Financial Statements and to the Department with quarterly performance reports

WRCWRC

Minister appoints boards; approves

shareholder compact

Minister appoints boards; approves

shareholder compact

Portfolio Committee

reviews reports and plans

(hearings, visits)

Portfolio Committee

reviews reports and plans

(hearings, visits)

(1) Oversee institutional establishment;(2) Oversee governance (manage board appointment processes, training etc.); (3) Oversee shareholder compact; (4) Oversee business plans, quarterly performance reports and financial statements etc.

(1) Oversee institutional establishment;(2) Oversee governance (manage board appointment processes, training etc.); (3) Oversee shareholder compact; (4) Oversee business plans, quarterly performance reports and financial statements etc.

279 WUAs &Irrigation Boards

279 WUAs &Irrigation Boards

OVERVIEW OF ENTITIES

Trans Caledon Tunnel Authority (TCTA)

•Bulk raw water infrastructure•Project initiation•Project management•Debt management•Structuring and raising project finance•Knowledge management •Risk management•Operation and maintenance•Local economic development•Tariff setting.

The TCTA is a multi disciplinary state owned entity specialising in project financing, implementation and liability management. The TCTA’s products and services are:

STRATEGIC INTENT

•Deliver on all the directives provided by the Minister•Ensure that all project activities facilitate social transformation and build sustainable communities by providing jobs and empowering women, and youth and the disabled.•Operate the business and its projects and processes in a cost effective manner, •Build the knowledge and capability of the organisation•Ensure the continuous availability of high calibre human capital for

delivering on the organisational mission into the future.

The strategic intent of the TCTA is to assist the shareholder (DWA) to realise national development goals. TCTA’s corporate goals are aligned with the strategic agenda of government.The strategic goals for the reporting year were as follows:

GOVERNANCE

The Governing Board of the TCTA is appointed by the Minister. The current Board was appointed in August 2010 for a four year term.

As part of the 13 member board, the Minister appoints two non executive directors, one from DWA and one from NT for the purposes of stakeholder representation.

PROJECTSThe primary projects which TCTA funds and implements are the following:

• Lesotho Highlands Water Project (LHWP) – South Africa portion of the Delivery Tunnel North.• Berg Water Project (BWP).• Vaal River Eastern Subsystem Augmentation Project (VRESAP).• Mooi-Mgeni Transfer Scheme Phase 2 (MMTS2).• Komati Water Scheme Augmentation Project (KWSAP).• Olifants River Water Resource Development Project Phase 2 (ORWRDP2).• Mokolo-Crocodile River Water Augmentation Project Phase 1 (MCWAP1).• Metsi Bophelo Borehole Project (MBBP).• Acid Mine Drainage: pump station and Treatment plant (AMD)

ADVISORY SERVICES

The TCTA also works closely with the DWA, water boards, municipalities and other entities that are linked to bulk raw water infrastructure.

In particular during the reporting period the TCTA provided advisory support to DWA on the Acid Mine Drainage (AMD) project.

TCTA PERFORMANCE

Deficit 2011/12

The audited results for 2010/11 recorded a R24 million surplus and this has been restated to a deficit of R284 million in the current financial statements.

The overall reason for the restatement is a change in accounting policies applied retrospective to 31 March 2011, in accordance with the International Accounting Standards Presentation and Disclosure, related to construction assets previously recognised as property, plant and equipment and intangible assets.

TCTA PERFORMANCE( Continued)

Borrowing rates/Credit ratingThe TCTA has gained and maintained market credibility that enables it to access off budget funding for projects at excellent rates.

Annual Audit reportThe TCTA obtained a “clean” audit report of its annual financial statements for 2011/12 financial year.

TCTA PERFORMANCE( Continued)

FISCAL YEAR31 MARCH 2012

2012 ACTUALR million

2011 ACTUALR million

% CHANGE

Revenue 1 790 777 130.3

Net deficit 404 284 42.2

Operating expenses 511 565 -9.5

Net finance costs 2 780 3 091 -10.0

Non-current assets 26 428 27 180 -2.7

Long-term obligations

23 739 23 955 -0.9

Reserves and surplus

5 575 5 979 -6.7

SUMMARY & CONCLUSION

TCTA

The TCTA is playing an increasing strategic role in the sustainable development and use of raw water resources. Despite the current challenges in its operating macro-economic environment and its multi-project arrangements, the TCTA has reported satisfactory results for the 2011/12 financial year by achieving the majority of its contracted deliverables.

OVERVIEW OF ENTITIESWater Research Commission (WRC)

The Water Research Commission (WRC) derives its mandate from the Water Research Act, Act no 34 of 1971.In terms of its mandate the WRC is to perform the following functions:

•Promoting co-ordination, co-operation and communication in the area of water research and development.•Establishing water research needs and priorities.•Simulating and funding water research according to priority.•Promoting effective transfer of information and technology.•Enhancing knowledge and capacity building within the water sector.

STRATEGIC INTENT

The WRC serves as South Africa’s water centred knowledge hub providing the nation with knowledge for sustaining its most precious resource, water.

The WRCs strategy for knowledge creation and its research portfolio is underpinned by its four main key strategic areas (KSAs) these being:

•Water resource management•Water linked ecosystems•Water use and waste management•Water utilisation in agriculture

GOVERNANCE

The Governing Board of the WRC is appointed by the Minister for a four year term and is the Accounting Authority (AA) for the institution in terms of the PFMA.

The governing board is constituted of independent non executive members with the exception of the Chief Executive and the Director General of the Department of Water Affairs who serve in an ex officio capacity.

WRC PERFORMANCE

Revenue 2011/12

During the year under review the WRC continued to leverage levy income by striving to obtain funds from other sources to support water research.

Indicator 2011/12 Budget 2011/12 Year-end Actual

Levies as % of total income 86% 83%

Other sources of income as % of total income

14% 17%

Leveraged income as a % of other income *

80% 79%

Income Indicators*Leveraged income includes all other income with the exception of interest

received

WRC PERFORMANCE (Continued)

Research Spend (Allocation)

WRC PERFORMANCE (Continued)

Research Spend (% utilized)

KSA Planned % allocation of funds

% of fund utilised for research projects

Water Resource Management

26 (28) 28 (31)

Water-Linked Ecosystems 14 (13) 17 (20)Water Use and Waste Management

33 (36) 34 (29)

Water Utilisation in Agriculture

27 (23) 21 (20)

The actual % of funds utilised for research projects in each of the KSAs, relative to the allocated funds is summarised in the table below. (2010/11 data in brackets)

WRC PERFORMANCE (Continued)

Annual AuditThe WRC obtained a “clean” audit report of its annual financial statements for 2011/12 financial year.

Statutory Compliance

The WRC complied with all statutory reporting requirements for the reporting period including strategic plans, business plans, budget, quarterly reports and other relevant statutory submissions.

WRC PERFORMANCE (Continued)Research Portfolio

During the year under review, the WRC managed 322 research projects at various stages of project life cycle, of which about 79% (259 projects) were active projects. In addition 133 reports were published

Financial Year 2011/12 2010/11

Total No of projects 322 328

No of active projects 258 259

No of new projects 74 77

No of finalised project 96 76

No of solicited projects 101 109

SUMMARY & CONCLUSION

WRCThe commission is a unique, valuable and strategic research entity that plays an important role in the water sector and water research by establishing needs and priorities, stimulating and funding research, promoting the transfer of information and technology, and enhancing knowledge and capacity building in the water sector. The commission has reported satisfactory results for the 2011/12 financial year.

THANK YOU !!!!