Portfolio Committee 14 October 2004 Martie van Rensburg Robert Mbwana.
-
Upload
magdalene-rich -
Category
Documents
-
view
217 -
download
0
Transcript of Portfolio Committee 14 October 2004 Martie van Rensburg Robert Mbwana.
Portfolio Committee
14 October 2004
Martie van RensburgRobert Mbwana
[ Agenda ][ Agenda ]
1. Presentation of 2004 Annual Report TCTA – the entity Report on Lesotho Highlands Water Project Report on Berg Water Project Report on Umgeni Water Treasury Management The future
2. Comments on National Water Resource Strategy
1. Presentation of 2004 Annual Report TCTA – the entity Report on Lesotho Highlands Water Project Report on Berg Water Project Report on Umgeni Water Treasury Management The future
2. Comments on National Water Resource Strategy
Section 138A, Water Act 1956 replaced by National Water Act 1998, Chapter 10
Notice of Establishment – 1986 version from Treaty between RSA and Lesotho, revised in 2000 creating a wider mandate
PFMA – schedule 2 powers
Report via Minister of Water Affairs and Forestry to Cabinet and Parliament
[ Who is TCTA? ][ Who is TCTA? ]
TCTA
DWAF
Dams
Treat raw water to Potable level
Deliver water and sanitation through network
Water Boards
Municipality
End User
[ TCTA = position in water sector ]
[ Liability Management ][ Liability Management ]
PROJECT VIABILITY
PROJECT FUNDING
ENGINEERINGAND
CONSTRUCTIONMANAGMENT
RISKIDENTIFICATION,ASSESSMENT &
MANAGMENT
STRATEGIC MANAGEMENTOF ENVIRONMENTAL ASSETS
STRATEGIC MANAGEMENT OFSOCIAL ASSETS
PRO-ACTIVEDEBT
MANAGEMENT
[ TCTA – The Multi-Project Environment ]
[ UMGENI WATER]• Governed by SLA• Current debt – R 3
500 million• Redemption assets
– R 1 200 million
[ OTHER ]• Mhlathuze Water,
Bloem Water• Tariffing and debt
management services
[ LHWP ]
• Funding and Risk Management on behalf of Government
• Debt is explicitly Government Guaranteed• Current debt - R 17 900 million • Current assets - R934 million
[ BWP ]
• Funding, Risk Management and Implementation on behalf of Government
• No Government Guarantee – Project Financed• Current debt - R 30 million• Forecast capital expenditure - R 1 500 million
[ OTHER ]
• Funding, Risk Management and Implementation for DWAF on future projects
Liability Managers for Bulk Raw Water InfrastructureIntegrated Treasury
Management Services
[ Specialised Liability Management ]
TCTALiability Management
ORGANISATIONAL STRUCTURE
Bu
sin
ess
Imp
erat
ives
Bu
sin
ess
Imp
erat
ives
Co
rpo
rate
Go
vern
ance
Ris
k M
anag
emen
tF
ram
ewo
rk
Fu
nd
ing
& D
ebt
Man
agem
ent
Pro
ject
Imp
lem
enta
tio
n
Via
ble
& S
ust
ain
able
Pro
ject
s
EnterpriseRiskManagement
TariffingTariffing
FundingFunding
Risk ManagementRisk Management
EngineeringEngineering
Socio EnvironmentalSocio Environmental
CommunicationCommunication
[ Risk Management ]
[ TCTA: Risk Management Principles ][ TCTA: Risk Management Principles ]
IN ORDER OF PRIORITY
OPTIMAL CAPITAL STRUCTURE(Fixed/Floating)
ASSET/LIABILITY MATCHING(Refinancing & Forward Interest
Rate Risk)
REDEMPTION PORTFOLIO MANAGEMENT
(Large Debt Maturities)
PRO-ACTIVE INTEREST RATE RISK MANAGEMENT
SCENARIO & STRESSTESTING:
Manage peak and tail of debt curve based on following scenario’s: Zero and negative
growth in demand Changes in:
inflation real interest rates timing of future
augmentation
[ TCTA: Tariffing Principles ]
Constant tariffin
realterms
End user
affordability
Debtoutstanding
• Economic useful life of assets• Timing of future augmentation • Water consumed vs water delivered
[ TCTA: Funding Principles ][ TCTA: Funding Principles ]
““HOW”HOW”
Manage overall maturity structure of debt in a risk sensitive manner
Exploitation of opportunistic funding opportunities
Active marketing of funding programmes
Contribute and participate in building better markets
Through ongoing dissemination of information to investors
FundingPro-actively manage funding to achieve lowest weighted average cost of funding
[ Project implementation philosophy ] [ Project implementation philosophy ]
Implement the most appropriate and cost effective, timeous solution within an acceptable risk framework;
Co-operative partnerships will be entered into with due regard for cost impact, appropriate risk allocation and accountability;
All arrangements formalised with agreements; Appropriate remedies will be implemented to
mitigate the impact of the Project on the environment and community; and
Development principles to be applied: Utilisation of local labour and businesses Effective balance between labour intensive
methods and impact on cost and timing Co-ordination to fit in regional and local
development plans
Implement the most appropriate and cost effective, timeous solution within an acceptable risk framework;
Co-operative partnerships will be entered into with due regard for cost impact, appropriate risk allocation and accountability;
All arrangements formalised with agreements; Appropriate remedies will be implemented to
mitigate the impact of the Project on the environment and community; and
Development principles to be applied: Utilisation of local labour and businesses Effective balance between labour intensive
methods and impact on cost and timing Co-ordination to fit in regional and local
development plans
[ TCTA the entity - 2004 highlights ][ TCTA the entity - 2004 highlights ]
Increased focus on governance and assurance (legal and internal audit ) functions
Board efficiacy review – healthy Enterprise wide risk assessment Increased focus on risk management Long term Credit Rating ZA AAA with and without
guarantee (excluding impacts of BWP) Organisational development – culture print and DNA Learning and development Full compliance to BEE and PPPFMA Rated under top ten performing companies > 25 %
senior female
Increased focus on governance and assurance (legal and internal audit ) functions
Board efficiacy review – healthy Enterprise wide risk assessment Increased focus on risk management Long term Credit Rating ZA AAA with and without
guarantee (excluding impacts of BWP) Organisational development – culture print and DNA Learning and development Full compliance to BEE and PPPFMA Rated under top ten performing companies > 25 %
senior female
[ Employment Equity ][ Employment Equity ]
CATEGORY BLACK MALE*
BLACK FEMALE *
WHITE MALE
WHITE FEMALE
TOTAL
Executive 1 3 4 3 11
Management 1 3 5 2 11
Professionals 3 3 0 5 11
Support 0 5 0 2 7
TOTAL 5 14 9 12 40
* Black includes African, Indian and Coloured.
[ Segmental Income Statement ] [ Segmental Income Statement ]
LHWP
2004
R’million
UW
2004
R’million
TOTAL
2004
R’million
TOTAL
2003
R’million
Revenue 1 538 3 1 541 1 332
Royalties paid 208 - 208 184
Operating expenses 78 3 81 103
Operating surplus 1 252 - 1 252 1 045
Finance cost 1 351 - 1 351 1 098
Net deficit for the year 99 - 99 53
(1) LHWP – Lesotho Highlands Water Project
(2) Umgeni Water treasury management services
[ Segmental Balance Sheet ][ Segmental Balance Sheet ]
LHWP
2004
R’million
BWP
2004
R’million
TOTAL
2004
R’million
TOTAL
2003
R’million
ASSETS
Non-current assets 15 872 34 15 906 13 911
Property, plant and equipment 14 913 34 14 947 13 907
Long-term financial market investments 942 - 942 4
Receivables and prepayments 17 - 17 -
Current assets 777 11 788 691
Receivables and prepayments 442 4 446 341
Short-term financial market investments 335 - 335 350
Cash and cash equivalents - 7 7 -
Total assets 16 649 45 16 694 14 602
[ Segmental Balance Sheet ][ Segmental Balance Sheet ]
LHWP
2004
R’million
BWP
2004
R’million
TOTAL
2004
R’million
TOTAL
2003
R’million
EQUITY AND LIABILITIES
Reserves and deficit (2 173) - (2 173) (2 138)
Non-distributable reserves 84 - 84 24
Cumulative deficit (2 257) - (2 257) (2 162)
Non-current liabilities
Long-term financial market liabilities 16 187 - 16 187 15 082
Current liabilities 2 635 45 2 680 1 658
Payables 511 6 517 484
Short-term financial market liabilities 2 124 39 2 163 1 174
Total equity and liabilities 16 649 45 16 694 14 602
(1) BWP – Berg Water Project
Lesotho Highlands Water ProjectLesotho Highlands Water Project
[ LHWP ][ LHWP ]
[ Lesotho Highlands Water Distribution ][ Lesotho Highlands Water Distribution ]
Normal
Emergency
[ Governance Structure ][ Governance Structure ]
LHWC
Governmentof Lesotho
Government ofSouth Africa
[ TCTA –LHWP 2004 Highlights ][ TCTA –LHWP 2004 Highlights ]
Inauguration of phase 1B and completion of Phase 1 celebrated in March 2004
Project of the Century Award – SAICE Asset and Liability management focus – R 18 billion
debt managed 2nd largest issuer of bonds (next to government) Successful prosecution by Lesotho Government and
Authorities on bribery and corruption charges Completion of phase 1 impacts on institutional
structures in Lesotho Raised R 2 .7 billion of funding
Inauguration of phase 1B and completion of Phase 1 celebrated in March 2004
Project of the Century Award – SAICE Asset and Liability management focus – R 18 billion
debt managed 2nd largest issuer of bonds (next to government) Successful prosecution by Lesotho Government and
Authorities on bribery and corruption charges Completion of phase 1 impacts on institutional
structures in Lesotho Raised R 2 .7 billion of funding
[ TCTA –LHWP 2004 Highlights ][ TCTA –LHWP 2004 Highlights ]
Launched first split maturity bond – R 1 billion Operating surplus of R 1. 3 billion Planned defecit after interest paid R 99 million – due
to project finance principles used in water tariff structure
AC 133 compliant Water volumes :
Delivered : 687 million m3
Sold : 1 325 million m3 – R 1.5 billion
Launched first split maturity bond – R 1 billion Operating surplus of R 1. 3 billion Planned defecit after interest paid R 99 million – due
to project finance principles used in water tariff structure
AC 133 compliant Water volumes :
Delivered : 687 million m3
Sold : 1 325 million m3 – R 1.5 billion
[ LHWP: Sources of Funding ]
As at 31 March 2004 R 17 809 million
Other3%
Foreign Institutions
7%
WS0121%
WS0317%
WS0425%
WS0510%
WSP1-WSP56%
Commercial Paper
Program11%
Capital Market Bonds 79 % Foreign 7 %Other funding 21 % Local 93 %
Fixed 73 %Floating 27 %
[ Tariff Composition ][ Tariff Composition ]
TARIFF COMPOSITION FOR DOMESTIC USAGE2003/04 Financial Year
R -4.00
R -2.00
R 0.00
R 2.00
R 4.00
R 6.00
R 8.00
R 10.00
0 to 6 kl >6 to 10 kl >10 to 15 kl >15 to 20 kl >20 to 40 kl >40 kl
Block Usage
Ran
ds
pe
r c
ub
ic m
etr
e
TCTA DWAF WATERBOARD MUNICIPALITY
Free Water:Net Zero Cost
[ LHWP: Debt Maturity Profile and Liability Curve ]
5
10
15
20
25
30
35
40
2003/04 2005/06 2010/11 2016/17 2018/19 2025/26
RA
ND
BIL
LIO
NS
Forecast
Issued
CPPWS01
WS03 WS04
WS05
Capital Value
Split Maturity Bonds
[ LHWP – Social aspects ][ LHWP – Social aspects ]
RSA – Eastern Free State Learnerships Tourism Education Disabled persons
Lesotho Compensation (individual and community) Resttlement Access roads Food security and agriculture Rural water supply
RSA – Eastern Free State Learnerships Tourism Education Disabled persons
Lesotho Compensation (individual and community) Resttlement Access roads Food security and agriculture Rural water supply
Berg Water ProjectBerg Water Project
[ Location of Project ]
[ Western Cape Water System ]
Voëlvlei Dam
Theewaterskloof Dam
Kogelberg Dam
Berg River Dam
DWAF
TCTA Water Income
City of Cape Town
Steenbras Dam Wemmershoek Dam
WaterDelivered
WaterDelivered
SalableWater
SalableWater
Water DeliveredWater Delivered
Other Users
Other Sourceseg Misverstanddam
Other Sourceseg Misverstanddam
[ Public Public Partnership Agreements ]
City of Cape TownCity of Cape Town
DWAFDWAF
TCTATCTA
• Supply of water from WCS to CCT
• Conditions of Supply
Agreement 1:
Agreement 2:
• Payment for water incl. BWP to TCTA• Payment for water incl. BWP to TCTA
• Implementation
• Payment of watercharge
• Collection of income
[ TCTA – 2004 Business highlights ][ TCTA – 2004 Business highlights ]
Agreements signed April 2003 Dam type selection completed and procurement of
contractors Environmental :
Environmental Monitoring Committee Approval of environmental management plan Franschhoek First policy
Long term credit rating AA+ Long term funding on place Future
Impact mitigation Housing Public participation
Agreements signed April 2003 Dam type selection completed and procurement of
contractors Environmental :
Environmental Monitoring Committee Approval of environmental management plan Franschhoek First policy
Long term credit rating AA+ Long term funding on place Future
Impact mitigation Housing Public participation
[ TCTA – score card ][ TCTA – score card ]Employment OpportunitiesEmployment Opportunities
Employment Local Total
Dam contract 72 111
Access Road contract 153 198
Working for water 252 252
TOTAL 477 561
Employment Local
Dam contract 6
Working for water 21
TOTAL 27
Procurement OpportunitiesProcurement Opportunities
[ TCTA – score card ][ TCTA – score card ]
Training OpportunitiesTraining Opportunities
Training Training
days
Number of Local
Persons
Working for water 194 48
TCTA 1 071 66
TOTAL 1 265 114
[ TCTA – score card ][ TCTA – score card ]
SMME Training and SupportSMME Training and Support
Training and Support Number of SMME’s
3 Training courses 14
2 Local joint venture tenders submitted for La Motte construction housing
Outcome of training and supportOutcome of training and support
[ BWP: Debt Curve in Actual Rand Value ]
BWP LIABILITY CURVE AND ANNUAL CAPITAL CHARGE
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
'03 '06 '09 '12 '15 '18 '21 '24 '27 '30
Ran
d m
illio
n
-
0.200
0.400
0.600
0.800
1.000
1.200
1.400
1.600
1.800
2.000
Ran
d p
er m
3
Total Liability Curve Capital charge FV Capital charge PV
Construction Period
Repayment Period - 20 years
Umgeni Water
Treasury Management
Umgeni Water
Treasury Management
[ Umgeni Water Treasury Management Services ]
Service LevelAgreement
Phases
Status Complete Complete Complete In Progress
Ministerial Directive – started 11 July 2001
Phase 1: Situation analysis and take-on
Phase 2: Tariff, debt and treasury model review
Phase 3: Balance sheet and treasury model restructuring
Phase 4: Capacity building and handover
2 Year SLAJuly 01 - July 03
SLA extendedJuly 03 - July 05
Phase 1 Phase 2 Phase 3 Phase 4
[ Umgeni Water - Phase 1][ Umgeni Water - Phase 1] Full treasury operations take-on
Market Making Cash Management Portfolio Management Accounting, Compliance, Audit Risk Management
Full data take-on and due diligence
Legal & Regulatory compliance
Full Business Analysis Vision, Mission Long-term business plans Tariff model Long-term cash flow analysis Accounting policy & procedures
Phase 1
Situation analysis and take-on
[ Umgeni Water – Phase 2 ]
Reviewed of tariffing methodology
Broad strategy for Umgeni restructuring
Gap Analysis between current treasury model and that required to support core business
Input into annual financial statements
Reviewed of tariffing methodology
Broad strategy for Umgeni restructuring
Gap Analysis between current treasury model and that required to support core business
Input into annual financial statements
Phase 2
Tariff, debt and treasury model review
[ Umgeni Water – Phase 3 ]
BALANCE SHEET RE-ENGINEERING:
Exited Market Making - 28 November 2003 : Closure Market Making portfolio and repo book Elimination of cash flow risk associated with
market making Freeing up of financial assets used for Market
Making to support redemption portfolios
Greater Achievement of Asset / Liability Matching Minimize re-financing and forward starting
interest rate risk through restructuring of structured loans and UG55 / UG66 debt buyback
Negotiated R1 billion in amortizing debt to support balance sheet restructuring and asset / liability matching
Phase 3
Balance sheet re-engineering and treasury restructuring
[ Umgeni Water – Phase 3 ][ Umgeni Water – Phase 3 ]
BALANCE SHEET RE-ENGINEERING::
Greater Achievement of Optimal Capital Structure From 92 % fixed / 8 % floating to 73 % fixed /
27 % floating
Restructuring of long-term Investment Portfolio for Redemption Portfolio Purposes
TREASURY MODEL RESTRUCTURING:
Simplification of Umgeni Treasury requirements by turning treasury into a cash management operation
Phase 3
Balance sheet re-engineering and treasury restructuring
[ Umgeni Water – Phase 4 ][ Umgeni Water – Phase 4 ]
Input into income and supply agreements
Build capacity through: Creation of in-house Umgeni treasury Transfer of skill’s – treasury, finance
and internal audit
Formulate detailed handover plan and execute
Create commercial contract for ongoing specialized treasury services
Input into income and supply agreements
Build capacity through: Creation of in-house Umgeni treasury Transfer of skill’s – treasury, finance
and internal audit
Formulate detailed handover plan and execute
Create commercial contract for ongoing specialized treasury services
Phase 4
Capacity building and handover
Behold our kaleidoscope, scintillating gems united in
splendor…
Thank You
265 West Street
Centurion
0046
Telephone: (012) 663 8000
Fax: (012) 663 5054
Website: http://www.metsi.com http://www.tcta.co.za
e-mail: [email protected]