WATER REQUIREMENTS IN SOUTH AFRICA AND THE ROLE OF WATER BOARDS

Transcription

1 WATER REQUIREMENTS IN SOUTH AFRICA AND THE ROLE OF WATER BOARDS The Case for Rand Water and its Supply Area DKP Sechemane Chief Executive of Rand Water Presentation to the Water Summit 25 February

2 PRESENTATION OUTLINE 1. Introduction and Background 2. National Water Requirements 3. Institutional and Policy Issues 4. Role of Water Boards 5. Demand Forecasting & State of Play 6. Addressing the Needs 7. Challenges 8. Concluding Remarks & Looking into the future 2

3 1. INTRODUCTION & BACKGROUND 3

4 Water Distribution Water Availability: National Rainfall and Evaporation Arid Wet Uneven water distribution Necessitates water transfer 4

5 2. NATIONAL WATER REQUIREMENTS 5

6 Water Availability & Demand 6

7 Estimated Water Use 7

8 3. INSTITUTIONAL AND POLICY ISSUES 8

9 3.1 Strategic Water Valuechain 9

10 WATER VALUE CHAIN 10

11 Roles, strategic responsibilities in Water & Sanitation context NATIONAL NDP SECTOR -LEAD DEPT National Level Oversight - Water Security Panning (NDP) National Monitoring & Evaluation National Master Plan (Lead Dept. DWS) Policy mgt. (implementation, interpretation) Dev. national guidelines and regulations REGONAL WATER UTILITY/PROVINCIAL/CMA Regional Level Ensuring proper implementation of national norms & standards (go beyond this!) Integrated mgt of the resource Coordinate local & catchment activities Regional Institutions LOCAL (District, Municipal & comunity) Local Level Overall Guidance by lead Dept.) Ensure alignment with national guidelines & regulations Implementation locally - critical 11

12 4. ROLE OF WATER BOARDS (Regional Water Utilities) 12

13 Level of risk taking by water board RWU Functional Spectrum Typical spectrum of contracts which can be applied: Full ownership BOT Concessions Leases Management contracts Operating contracts Implementing Agent Advisory Length of contract period Primary activity - where WU owns the infrastructure and sells water to retailers or direct to end users. Secondary (B) activity - low risk short-term contracts where water boards act as advisors, implementing agents (building infrastructure), mgt. contractors or operators. Secondary (A) activity: long-term contract with a WSA/client to act as a water services provider. Page 13

14 4.1 HISTORICAL CONTEXT 14

15 1900s INTRODUCTION AND BACKGROUND 15

16 The Rand Water Board 1. INTRODUCTION AND BACKGROUND 16

17 The Rand Water Board 1. INTRODUCTION AND BACKGROUND ±110 YEARS The Rand Water Group 17

18 Page 18 Vision + Objective Comparative Rand Water s Vision To be the industry leader and partner of choice in sustainable water services Rand Water s Strategic Objectives Position Rand Water as the partner of choice in water services Satisfy all customers Improve efficiencies and quality Achieve transformation Create a dynamic learning organisation Rand Water s Vision To be a provider of sustainable, universally competitive water and sanitation solutions for Africa Rand Water s Strategic Objectives Achieve Growth Achieve Operational Integrity and Use Best Fit Technology Achieve a High Performance Culture Positively Engage Stakeholder Base Maintain Financial Health & Sustainability

19 HORIZONS RAND WATER 2030 Global Growth African Growth South African Growth Current TIME Rand Water's 2030 Vision - towards a world class 19 water services provider 2030

20 Key Strategic Drivers Quality and quantity of Raw Water Growth Initiatives RW Academy Top 10 Risks RAND WATER STRATEGY RAND WATER 2030 Beyond South Africa NDP Presidential Outcomes Organizational Preparedness Bulk Sanitation Rural Development Page 20 20

21 Key Strategic Drivers Quality and quantity of Raw Water Growth Initiatives RW Academy Top 10 Risks RAND WATER STRATEGY RAND WATER 2030 Beyond South Africa NDP Presidential Outcomes Organizational Preparedness Bulk Sanitation Rural Development Page 21 21

22 Rand Water of the Future Rand Water chose to explore the nature of its future over a 20 year period from 2010, i.e. what Rand Water and the water sector could look like in the future. Now - 1 st July st July st July st July 2030 Satisfied Markets Served Institutional Reform Policy and Legislation Environmental Redress, Sustainability & Leadership Technological Innovations Skills development and world leadership 22 Page 22

23 Where are we in 2016 w.r.t the RW 2030 Vision Rand Water of the Future Rand Water chose to explore the nature of its future over a 20 year period from 2010, i.e. what Rand Water and the water sector could look like in the future. Now - 1 st July st July st July st July 2030 Satisfied Markets Served Institutional Reform Policy and Legislation Environmental Redress, Sustainability & Leadership Technological Innovations Skills development and world leadership 23 Page 23

24 RW Expanded Areas 24

25 Rand Water s Previous & Extended Area Snapshot Rand Water supplied an average of 4757 Ml/d Revenue R9.8bn (R8.7bn~2014) Total Assets R18.4bn (R15.3bn~2014) Rand Water s Extended Area of Operations includes 27 new local councils Gauteng Limpopo (Greater Groblersdal and Great Mable Hall North West (Rustenberg & Madibeng areas) Mpumalanga Northern Free State (Boundary of the Upper Vaal WMA) Maluti-a- Phofung, Dihlabeng, Nketoana, etc Current New Total Population 12 million 4 7 million million Economy (% of GDP) 34% 7 16% 41 50% 25 The exact numbers are difficult to calculate because the extended area incorporates portions of Limpopo, North West and Free State. Only Mpumalanga and Gauteng are included in total.

26 RW & extended areas of operations Typical water services value chain Rain Department of Water and Sanitation Regional Water Utility Catchment management Dams Transfer schemes Abstraction Pipes Pumps Conveyance Pipes Canals Aqueducts Pump stations Treatment Conventional Point of source Ozonation UV Disinfection Chlorination Membrane filtration Distribution (Bulk?600mm ) Pipelines Booster Station Chlorination Metering Reservoirs Waste Water Treatment Distribution System (Reticulation?600mm) Water Quality Testing Pipelines Metering Metering Metering Households Industries Agriculture Influent Metering Discharge Re - use Conventional Ozonation Membrane filtration UV Disinfection Reclamation REGIONAL WATER UTILITY / WATER BOARDS MUNICIPALITIES UTILITIES., MUNICIPALITIES & OTHER SPECIALIST COMPANIES, INDUSTRIES Page 26

27 Expanded Areas Name of Local Municipalities 1 Region 1 Thembisile Dr JS Moroka Greater Marble Hall Elias Motsoaledi 2 Region 2 Bushbuckridge Thaba Chweu Mbombela Umjindi 3 Region 3 Emakhazeni Steve Tswhete Emalahleni 4 Albert Luthuli Nkomazi 27

28 Expanded Areas Name of Local Municipalities 5 Region 5 Msukaligwa Mkhondo Govan Mbeki 6 Region 6 Lekwa Seme 7 Region 7 Phumelela Mafube Nketoana Dihlabeng Maluti a Phofung 28

29 RWU & Direct Water Provision Direct Bulk Water Provision to Customers Rand Water Treated water provided WSP contract WSA 1 District Municipality WSA 2 Local Municipality WSA 3 Local Municipality WSA 4 Local Municipality WSP contract WSP contract WSP contract WSP contract Customers Customers Customers Customers Water Water supply supply Page 29

30 RWU & Municipal Retail Institutional arrangements for regional bulk and municipal retail provision Rand Water Treated water provided BWSP contract BWSP contract WSA 1 District Municipality WSA 2 Local Municipality WSA 3 Local Municipality WSA 4 Local Municipality WSP contract Bulk water provided Water Dept. retail Water Dept. retail Water Dept. retail Water Depts retail Customer contract Customer contract Customer contract Customer contract Water Customers Customers supply Customers Customers Page 30

31 5. DEMAND FORECASTING AND STATE OF PLAY 31

32 Capital Expenditure In The Near To Medium Term Rbn Capital budget for 2015/16 Annual Budget 2014/15 Continuing business R3.1 billion Augmentation projects R1.7 billion Renewal projects R 1.3 billion BBR R100m Capital expenditure 5-year plan 5-year plan Total planned capital expenditure = R18 billion ( ) Projected R9.9 billion for augmentation projects Project distribution by value Expenditure planned on 382 projects; Top 15 projects have total planned expenditure of about R1.3 billion; Many smaller projects. Typical renewal projects Pipeline replacement; Engine room refurbishment; Relation to asset replacement value Estimated current asset replacement value of over R90 billion should spend 1% to 2% per annum on renewal. Forecast average demand growth of 1.75% per annum to 2030; Funding for augmentation and renewal Augmentation R1.7billion p.a. Upgrade/replacement of treatment plant; Renewal R1 billion p.a. Upgrade/replacement of switchgear, pumps, motors, valves, Need better long term balance. instrumentation. Capital expenditure forecast on continuing business / / / / / / / / / / / / /20 Financial year 32

33 Analysis of Capital Expenditure Capital expenditure 2014/15 9% 1% 8% 3% Pipeline 79% Resevoir Pumping Purification other R 2.5 billion 5-year Capital expenditure 2016 to % Pipeline 21% 47% Resevoir Pumping R 18 billion 15% 7% Purification Other 33

34 31 Dec Dec Dec Dec Dec Dec Dec Dec 2020 Ml/d Zb FH2: 2012 Vg: B19; Sed Tank. Zb: Sys. 3 sed tank Zb Sys. 3 Sed. tanks (+100Ml/d) Zb FH 2B & sed tanks System 5 Phase 1A (+300 MLD) System 5 Phase 1B (+300MLD) System 5 Phase 1A (+300Ml/d) System 5 Phase 1B (+300Ml/d) Vg Sed tank (+200Ml/d) System Capacity & Redundancy Climatic conditions have changed with high temperatures experienced and thus increasing demand. Our normal production capacity 4757 Ml/d The system can be pushed under increased monitoring to produce 4662 Ml/d The Peak daily demand on record is 5008 Ml/d and the Peak week demand on record is 4700 Ml/d, The system is stable. There is a plan in place to manage the demand should it exceed one peak week Operational Capacity on current timeline Original Augmentation Plan 2014 AADD Forecast Peak Demand Maximum installed capacity Peak Week Maximum Daily demand in a month Previous horizons System capacity, peak day demand 5200 Installed capacity: 5150 Ml/d Nominal Operational Capacity: 4660 Ml/d actual put in supply projected put in supply

35 6. CHALLENGES 35

36 Water concerns and challenges The need to redress social and equity obligations Water security for economic growth and development Water resource pollution impacting availability Degradation of physical habitats and ecosystems availability impairement 36

37 Water concerns and challenges Adaptation to impact of climate change Need for improved governance & regulation Inadequate knowledge, research and skills Inadequate financing and resources Capability to implement Sustainable infrastructure management 37

38 Infrastructure Challenges 38

39 Drought situation Drought conditions due to prolonged lowerthan-normal rainfall across the country This has led to water shortages in a number of areas

40 7. ADDRESSING THE CHALLENGES 40

41 Is SA sliding into a water? Will be avoided if we collectively ensure: Effective implementation of WC/WDM measures, large-scale effluent re-use, curbing of unlawful water use promotion of large-scale and properly managed groundwater use arresting deteriorating water quality and timely decisions on appropriate investments Innovation technology, alternative sources like grey water, rainwater, fog harvesting, dual systems Bold decisions on large transfer schemes across borders beyond the Lesotho Highlands

42 Level of risk taking by water board Expand Functional Spectrum Typical spectrum of contracts which can be applied: Full ownership BOT Concessions Leases Management contracts Operating contracts Implementing Agent Advisory Length of contract period Primary activity - where RW owns the infrastructure and sells water to retailers or direct to end users. Secondary (B) activity - low risk short-term contracts where water boards act as advisors, implementing agents (building infrastructure), mgt contractors or operators. Secondary (A) activity: long-term contract with a WSA/client to act as a water services provider. Page 42

43 Examples of Involvement in Africa WOPS WOPS WOPS Ghana Rwanda - MOA signed with EWSA Mozambique Potential training opportunity DRC Operations and maintenanc e Botswana Swaziland signed MOU Page 43

44 8. CONCLUDING REMARKS & RECOMMENDATIONS FOR THE FUTURE 44

45 Looking Forward RW is committed to ensure that : A strong link with the Shareholder is maintained; Capital expenditure rollout remains a critical to its success; It continues to meet key water quality standards & provide a continuous and reliable supply of world-class water; Asset transfer and ownership of regional bulk infrastructure in new areas of operations will be critical; It works with sponsors to implement reticulation & rural development projects, supported by efficient funding mechanisms; To continue to pursue opportunities on the African 45 continent, under the direction of National Government;

46 Looking Forward RW is committed to: Continue to focus on the capacity of our existing structure as well as extended area of service; Ensure stable margins and returns; Establish a fully functional regional office in Mpumalanga; Extend the enhanced credit management process to new service areas; Timeous & efficient implementation of Ministerial Directives - Sedibeng Regional Sewer Scheme, War on Leaks and the 2 nd Phase of the Bushbuckridge Local Municipality reticulation program among others. 46

47 CONCLUDING REMARKS There are many challenges in the water sector A combination of factors that must be considered over and above water quality and quantity alone; It is therefore need a holistic and sector approach

48 CONCLUDING REMARKS (2) Holistic approach that is inclusive of Government agencies, private sector and communities to improve and optimise water use and management We need to value water more than anything to secure it for future generations Policies must be implemented urgently like establishment of Water Management Institutions (water utilities, CMAs etc)