Municipal Water Infrastructure Grant Municipal Water Infrastructure Grant

The National Assembly and National Council of The National Assembly and National Council of Provinces’ committeesProvinces’ committees

Briefing by the Department of Water Affairs Briefing by the Department of Water Affairs

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Date: 5 March Date: 5 March 20132013

Contents

1. Background and Overview2. Implementation Readiness3. Challenges and risks4. Conclusion

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1:Background and Overviewa. Interim/Intermediate Water Supply Programme (IIWSP) was

initiated in 2012 by the minister as a recognition of the plight of the many people without services, particularly in rural areas.

b. Programme will initially focus on the 24 DM with the highest backlogs and therefore merge with the existing initiative to address 2014 water backlogs (will subsequently not be limited to the 23 DM and target un-serviced areas in all WSA)

c. Programme is initiated by the DWA as part of its leadership role in the water sector.

d. The programme will facilitate solutions and where possible provide direct support and funding in areas that are not covered by existing projects.

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Need and overall challenge for IIWSPa. There is a risk that the 2014 service delivery targets for basic

services to all South Africans will not be metb. A key problem identified towards this target is not necessary funds

but institutional capacity and effective planning.c. The IIWSP was envisaged by DWA as a “Grant – in Kind”, where the

DWA together with Water Boards and other sector partners can play a more direct role in assisting the WSA in overcoming their challenges .

d. A key part of the envisaged approach was to deploy experts and engineers and capacitate / enable them to introduce quick solutions where possible.

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Aim / Purpose

The purpose of this programme is not to duplicate other existing programmes or initiatives but to supplement them were there are

gaps and to also provide some short –term and quick win solutions.

The programme also envisages addressing functionality related problems and not only addressing new infrastructure requirements

The programme is part of the new paradigm promoted by the DWA: “Source to tap – tap to source”

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Goals / ScopeGoals:

1.All communities living in settlements greater than 50 households must receive a minimum interim water supply before 30 June 2015 either through a permanent water supply scheme or an interim or intermediate water supply intervention.

2.In addition to the Interim, Intermediate, Intermediate Water supply interventions facilitate a solution to the “hot-spot” areas related to water service delivery challenges in the 24 priority DMs before 30 June 2015.

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Supplementary Goals 1) Maximise job creation: Strong emphasis must be placed on the development of

jobs for the unskilled rural people through the implementation of the strategy. This should be done by:

• Ensuring labour intensive construction methods are chosen• Ensuring that the interventions selected, have job creation as one of the key

selection criteria.• Ensuring the direct involvement of the communities with regard to management of

the water supply interventions.• Promoting the development of women co-operatives 2) Promote innovation, “back to basic” , indigenous technologies and new ideas:

The processes adopted must allow for innovation, the adoption of indigenous appropriate solutions and the introduction of new successful ideas. This can be achieved through:

• Research • Community involvement and participation• Through a media campaign / competition requesting submission of innovative

ideas from the public and private sector.

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Objectives of IIWSPThe following key objectives of the IIWSP are identified :a.Facilitate and ensure adequate planning & the development of B/P for each WSA that will ensure the provision of interim, intermediate water supply for all communities.b.Facilitate the involvement of various stakeholders to support the WSAs in the implementation of various interventions.c.Identify secure funds and support the implementation of various interim / intermediate interventions where there are gaps in the allocation of funds from existing programmes.d.Assist the relevant WSAs to accelerate the implementation of various existing projects and interventions that are aimed at providing water supply services.e.Identify and where possible provide additional training and support to ensure the sustainability and effective management of the various projects implemented

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Def. Interim /Intermediate Water Supply interventionAn interim / intermediate water supply intervention is a intervention that will ensure a minimum interim water supply and can be any of the following:a. New water supply infrastructure that can be subsequently upgraded to supply a minimum of basic water supply.b.A temporary water supply system that does not involve fixed infrastructure belonging to the Water Service Provider (i.e. roof rain tanks, etc)c.Any appropriate intervention that repairs or re-commission dysfunctional existing infrastructure or water resources to supply a minimum interim water supply.d.The acceleration of planned infrastructure projects to supply basic water.e.A water supply system that makes use of the most optimal existing and localized water resources and can be developed and commissioned within a period of twelve months in order to provide a minimum interim water supply. (This can include local boreholes, streams or single purpose dams been converted into multi-purpose dams )

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Cost of Water supply (all WSA)

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Province Infrastructure Need(HH)

Cost(R/M)

No Services (formal)

(HH)

Cost(R/M)

No Services (Informal)

(HH)

Cost(R/M)

Eastern Cape 286 323 R 6 049 100 000 137 852 R 8 971 600 000 94 965 R 78 400 000

Free State 118 815 R 2 744 060 000 0 R 0 0 R 0Gauteng 0 R 0 0 R 0 15 816 R 157 200 000Kwazulu Natal 73 264 R 72 910 000 446 581 R 5 038 410 000 11 651 R 89 340 000Limpopo 726 R 5 000 000 2 804 R 12 000 000 2 965 R 29 700 000Mpumalanga 88 720 R 447 400 000 37 R 290 000 28 445 R 151 400 000North West 188 409 R 2 291 650 000 43 872 R 660 140 000 13 947 R 74 790 000Northern Cape 1 443 R 59 605 000 4 835 R 64 298 000 2 289 R 43 511 000Total 757 700 R 11 669 725 000 635 981 R 14 746 738 000 170 078 R 624 341 000total 1 563 759 27 040 804 000R

24 priority DM are R 21 billion

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SCOPING Basic Water Needs 23 DMSCOPING Basic Water Needs 23 DM

• Not accurate, still updated (ie EC, O&M 0% )

Province No of DM No services % of totalO & M needs % of total

EC 5 147 392 25.94 - - FS 1 0 - 589 0.14 KZN 9 389 001 68.47 69 687 16.28 LP 4 3 641 0.64 287 665 67.22 MP 1 4 990 0.88 53 079 12.40 NW 3 21 932 3.86 16 905 3.95 NC 1 1 196 0.21 - - total 24 568 152 100 427 925 100

Categories of needs in 24 priority DMs

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MWIG IDENTIFIED NEEDS PER CATEGORIES % of total costA COMMUNITIES HAVING NO FORMAL WATER INFRASTRUCTURE 17.9%B COMMUNITIES REQUIRING EXTENSION TO EXISTING INFRASTRUCTURE 35.8%C COMMUNITIES WITH ACCESS TO INFRASTRUCTURE BUT NO ACCESS TO WATER BECAUSE OF FUNCTIONALITY PROBLEMS. 28.2%D COMMUNITIES WITH ACCESS TO INFRASTRUCTURE BUT NO ACCESS TO WATER BECAUSE OF SOURCE PROBLEMS 18.1%

100.0%

Can be subdivided as follows: - 15% WC/WDM

-13.2% refurbishment

Approval of MWIG by National Treasurya. As part of the IIWSP , the DWA motivated to NT the approval of funds

based on a holistic need assessment.b. The NT had informed the DWA in Dec 2012 that a new Grant has been

approved to fund the IIWSP, referred to as the Municipal Water Infrastructure Grant (MWIG) with a 4,3 Billion for the 2013 MTEF

c. Grant was approved as a schedule 5 Part B; Specific purpose allocations to municipalities and not as a Schedule 6 Part B : Allocations-in-kind to municipalities for designated special programmes .

d. The decision to make MWIG a schedule 5 instead of schedule 6, could affect the purpose, aims and performance of the IIWSP.

e. DWA has engaged NT to try and change the schedule but this has not been successful- The intension is to try and change it if possible during 2014.

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Linkages between IIWSP - MWIG

• IIWSP – Interim, Intermediate Water Supply Programmes – Developed by DWA

• MWIG – Municipal Water Infrastructure Grant – name used by National Treasury

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Link between IIWSP / MWIG

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Funding Implementation PlanningProgramme

management

DWA Construction Unit WS: Planning DWA team: PM committee

MWIGcontract support

teamcontract support

team

WSA WSA WSAsteering

committee

water boards Water Boards water boardsWater Baords: PM

committee

Private sector NGOs

IIWSP

MWIG will fund the IIWSP, IIWSP is a bigger programme that will try

and secure additional funds and bridge the

planning between the different Grans and

programmes

2: Implementation readiness

1. Consultation, corporate governance2. Governance3. Programme Management4. Planning 5. Financial Allocation6. Delivery models

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2.1 Meeting Minister with Mayors (24 DM)a. Minister met with Mayors and Provincial MECs in the 24 DM areas on the 13

August 2012 b. IIWSP was communicated and well received by the DM representativesc. Commitment to prioritise and work closely secured d. Some comments raised by the DM

a. unauthorized/ illegal connections to be addressed (lack of capacity relating to monitoring and control to be looked at);

b. Bore hole water is not preferred and is not reliable c. problems in connection with water sources and infrastructure that does not

serve poor communities d. lack of funding to pay for water tankers to be addressed e. Lack of funding for operations ad maintenance (O&M)f. MIG grants not being used properly by local municipalities hampers service

delivery – this must be addressed; g. institutional arrangements and models to cross-subsidise to address O&M

to be looked at;e. Comments considered and taken forward in the DCoG\DWA working group

DCoG/ WSA/DWA Collaborationa. Minister of CoGTA and Minister DWA set up a joint programme in May

2012 to strengthen partnership between DWA and DCoG towards accelerating access to water services

b. High level task team with dedicated working groups established with representatives from both DCoG and DWA and other relevant stakeholders

c. Terms of Reference and work plan for Working Group: Accelerated water services delivery and high risk areas developed

d. Links between the IIWSP / MWIG and broader basic water supply programme identified

e. Membership of Working Group to be extended to Technical Directors of the 24 DMs with first meeting scheduled for 8 March 2013

f. Intensive planning activities lead by DWA over the last six month in direct and constant consultation with all relevant WSA

2.2 Governance, tools and guidelinesa. MWIG Framework finalised setting out: Responsibilities; Process

for approval; Purpose; Outcome and Outputs; Conditions; b. Comprehensive IIWSP strategy / implementation plan developed. c. Various guidelines developedd. Term contracts for the procurement of bore-holes and planning

PSP developed.e. Business Plan templates developed.f. Terms of reference for provincial co-ordination planning

committees developed

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Conditions specified in framework

1. All receiving municipalities will be required to conclude formal agreements with the Department of Water Affairs (DWA) prior to implementation of the project(s)

DWA has standard agreements for RBIG that it will adopt for MWIG: - Apr 13

2. Projects to be identified by municipalities and must form part of the Integrated Development Plan (IDP) and Water Services Development Plan (WSDP) of the relevant municipality

DWA Planning progress is directly linked to WSDP process of WSA.

Identification of project to be completed by March 2104, Inclusion of all projects in municipal B/P and WSDP by Sep 2013

3. A technical team comprised of DWA, Department of Cooperative Governance (DCoG), Water Boards, WSA, and MISA must approve all designs and interventions of any project to be funded where the cost of the project is in excess of R20 million

DWA has approved the provision of additional support from Umgeni Water, and will also make use of capacity within the infrastructure unit

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Conditions specified in framework4. Projects must have suitably approved technical reports before funds can be transferred

Assessment guidelines have been developed.

5. DWA must be part of the adjudication panel for the appointment of contractorsA workshop with guidelines will be held within DWA by Apr 2013, to

train officials on key issues in assessing tenders

6. If a WSA is deemed not to have adequate capacity, projects must be implemented and managed by Water Boards or through alternative service providers appointed after agreement with the National Treasury

Water Boards have been briefed, shareholders agreements are in the process of been changed - Jul 13

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Conditions specified in framework

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7. Where necessary DWA in consultation with the WSA must facilitate service level agreements for the appointment of Water Boards as service providers to operate and manage the water supply once the project is completed, on behalf of the WSA.

Standard service level agreements are available

7. Ensure adequate consumer and community participation, involvement and education for each project

Existing Communication /awareness material by DWA will be revised and made available to WSA by Apr 13

8. If a project is to provide water services to rural communities consideration and priority must be given to establishing a Community Based organisation (CBO) to manage or assist with the management of the water supply after the project is completed

Involvement of WRC who developed a rural water supply strategy to assist with guidelines

Conditions specified in framework

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9. The WSA must ensure that the project is sustainable and remains functional after the project is completed and is supported by means of an asset management plan

Feasibility and business Plan assessment guidelines include O & M plan and are available. (from RBIG)

10. All projects having an impact on water resources must be aligned with any relevant water resource planning study and strategy developed or adopted by DWA

Water Resource Planning is required to sign off any related feasibility study

Additional conditions1. Funds will only be transferred by the Department of Water Affairs (DWA) for

work undertaken or implemented.Will be made part of agreement, specific conditions will vary from project to

project2. Projects must be part of an overall commitment by the Water Services Authority

(WSA) on how to eradicate all water supply backlogs in their area of supply.Holistic Business plans for each WSA will be developed in conjunction with MISA and WSA, (guidelines developed, pilot is currently been developed- Sep 13

1. When the Implementing Agent is a Water Board or any other service provider besides the WSA, the IA must maintain and operate the completed infrastructure on behalf of the WSA for a minimum period of two years or until the municipality has capacity and resources to manage and operate effectively and efficiently

Condition included in standard agreements, to be reviewed and discussed on project by project basis, is also part of the technical evaluation criteria .

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2.3 Programme Management, capacity (progress)

a. National Task Team establishedb. National Steering committee establishedc. Provincial Planning committees are merging with RBIG / ACIP

committees (ToR revised)d. DWA National and Provincial Programme managers appointed.e. Planning support contract appointed.f. Additional support contract approved. (Umgeni Water) g. Commitment to support from Water Boards secured (in

principle )

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Programme management unit

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2013/2014 DWA OfficialsDWA contract

workers

2015/2016DWA

contract workers

Support team

DWA Officials

DWA CAPEX committee

Programme Manager

DDG: Regions

Umgeni programme manager

Umgeni Support team

Involvement of Water Boardsa. Commitment from Water Boards to assist in roll out of programme obtainedb. Proposed role discussed / agreed with Water Boards

a. Assist in developing consolidated BP for each of the 24 priority DMs b. Contribute to the funding of various initiatives of the Interim and

Intermediate programme.c. Assist the DWA in the overall management of the programmed. Become Implementing Agents where possible .e. Strive to become the WSP for the operation of failing Water supply

schemes particularly in rural and weak municipalities.f. Develop in-house capacity / expertise with regards to rural water supply /

supply of water services.c. Shareholders agreement of Water Boards currently been modified to include

programme as key performance indicator.d. Next step is to define direct involvement of each Water Board for the

programme

Involvement of Water Boards (motive)

a. The aim is to change the existing paradigm and role of Water Boards and make them more directly involved in assisting WSA and municipalities in service delivery objectives.

b. Water Boards , are effectively an extension of government and they need to play a more proactive role in assisting the DWA and the water sector

c. Water Boards have some water sector expertise which we need to maximise the use of .

d. To ensure that Water Boards raise to the challenge, we need to give them adequate mandate and they need to do things differently from the past.

2.4 Planning Progress

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Step 1 completed,

Step 2 about to be completed – March 2013

Need / Initial Planning

Project identification /classification

technical feasibility Funding process

Identify need

Verify needCluster needs into

projects

Verify projects

Prioritise projects Technical feasibility

Assessment of feasibility

Develop Implementation Plan

Develop project B/P

Funding allocation

Develop overall WSA B/P

Step 1 Step 2 Step 3 Step 4

Update Information system

Progress Planning (contd)

Step 1: Each settlement has been categorised according to a specific need requirement in the following priority classes in the 24 DMs (comprehensive reports have been developed and verified with WSA):

Class 1: Communities having no formal Water Infrastructure.Class 2: Communities requiring extension to existing infrastructureClass 3: Communities with Access to infrastructure but no access to water because of functionality problems.Class 4: Communities with access to infrastructure but no access to water because of source problems.

Step 2: Proposed projects and actions for the short medium and long term to address specific intervention requirements for each settlement or group to be finalised end March 2013.

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Implementation Plan

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2015Apr/May/Jun Jul/Aug/Sep Oct/Nov/Dec Jan/Feb/Mar Apr/May/Jun Jul/Aug/Sep Oct/Nov/Dec Mar/Apr/May

Step 2: Project Implementation Plans

Step 4c: B/P of project

Step 5 c : Procurement

20142013N

ew p

roje

ct id

enti

fied

Qui

ck w

in r

eady

pro

ject

s id

enti

fied

Step 6c : Start Implementation of ready projects (accelerate existing approved)

Step 7b: start implementation of long

Step 4: Finalise of overall B/P of WSA

Step 5: Start Design & Procurement for short term

Step 3 Feasibility studies

Step 6: Start Design for bigger projects

Step 5b: Procurement for bigger projects .

Step 7: start implementation of short term projects

2.5 Financial allocations

a. Budget allocations are as follows:a. 2013/14 – R 602 millionb. 2014/15 – R 1059 millionc. 2015/16 – R 2671 milliond. Total R 4 333 million

b. Initial budget allocations done according to needs ( not projects)c. Budget allocations are indicated and published in DORA

according to WSA and according to LM. (2 lists), (see annexure A)d. It is envisaged once the planning has been finalised in the next

few months budget allocations will be adjusted accordingly)

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Initial Budget summary

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Eastern Cape Municipalities 86 778 023 251 686 320 469 843 320 808 307 663 18.7%Free State Municipalities 20 795 000 54 410 000 84 680 000 159 885 000 3.7%KwaZulu-Natal Municipalities 267 467 778 320 644 444 985 923 333 1 574 035 556 36.3%Limpopo Municipalities 93 473 000 227 850 000 519 964 000 841 287 000 19.4%Mpumalanga Municipalities 89 468 000 144 151 000 526 731 000 760 350 000 17.5%Northern Cape Municipalities 16 371 000 29 170 000 22 713 000 68 254 000 1.6%North West Municipalities 28 617 000 31 067 000 62 082 000 121 766 000 2.8%

602 969 801 1 058 978 764 2 671 936 653 4 333 885 219 100.0%National Total

ProvinceMunicipal Water Infrastructure Grant

2013/14 (R'000) 2014/15 (R'000) 2015/16 (R'000) Total % of total

Cash flow

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Cash flow projections takes into

account that considerable planning still needs to take

place in the first few months

1 2 3 4 5 6 7 8 9 10 11 12cumulative 3 700 000 7 730 000 11 950 580 18 475 597 28 563 272 44 158 819 68 269 535 105 544 700 163 172 107 252 264 077 430 000 263 602 965 000monthly 3 700 000 4 030 000 4 220 580 6 525 017 10 087 676 15 595 547 24 110 715 37 275 166 57 627 406 89 091 970 177 736 186 172 964 737

13 14 15 16 17 18 19 20 21 22 23 24cumulative 682 965 000 762 965 000 842 965 000 922 965 000 1 002 965 000 1 082 965 000 1 162 965 000 1 252 965 000 1 351 935 000 1 451 935 000 1 561 935 000 1 661 935 000monthly 80 000 000 80 000 000 80 000 000 80 000 000 80 000 000 80 000 000 80 000 000 90 000 000 98 970 000 100 000 000 110 000 000 100 000 000

2.6: IIWSP Implementation models /partnersa. WSA as IAb. WSA as IA assisted by Key stakeholder , (i.e DWA construction,

Water Board, DM) c. Water Boards – Through Service Level Agreements (long term)d. Water Boards as Implementing Agentse. Water User Association (particularly in farming communities)f. NGOg. DWA infrastructure unit (construction) h. DWA Regional office, through project management support and

support through the RRU

Note: WSA must always play a key role irrespective of model

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3: Challenges and risks

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1Risk that the WSA will not be able to conform to to the strict conditions

Support will be made available to enable all the requirements to be met

2Risk that WSA with little capacity will not accept alternative Implementing agent arrangements

Protocol developed to escalate issues to a political level

3Inadequate funding to provide additional project management support to municipalities that IA (as a schedule 5)

Facilitate the availability of resources from Water Boards, MISA and DM

4Risk of MWIG not meeting the core objectives of the IIWSP , of providing some water to all

Continuous monitoring and strict adherence to project evaluation criteria , emphasis to complete the overall WSA business plans for service delivery

5Risk that interventions will not be maintained by WSA after project is completed

Ensure O & M contract for a minimum of 2 yrs in place for large projects, WSA will be held liable in accordance to agreement, MISA to provide institutional support for sensitive projects

6Risk of under expenditure by programme and WSA

Introduce ready projects in the beginning, motivate for schedule 6 in 2014/15 DORA if current model is not working

Risk No. Risk description Mitigation

Conclusion

1. DWA has already carried out a lot of work in preparation for the IIWSP and MWIG.

2. Considerable more work needs to be done before actual construction takes place.

3. The greatest risk is related to the fact that MWIG is now schedule 5 but it was initially conceptualised as a schedule 6 (Grant-in kind)

4. It is anticipated that some projects can start implementation within the next 3 months.

5. DWA together with other key stakeholders is ready to start

implementation of the new programme.

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END

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