I thought we’d break from tradition in this communique and begin by indulging ourselves with this quotation by one of world’s best-known military leaders, United States Army Chief of Staff of the 1930s, General Douglas MacArthur. In a briefing to the United States Congress, he said: “A General is just as good or just as bad as the troops under his command.”

For me, this is one of the most apt quotations I have across, for two reasons:

1.I have some military experience by virtue of the fact I once served as a Reserve Force soldier in the South Africa National Defence Force of post-apartheid South Africa and also worked in the armaments industry.

2.As the Chief Executive of Umgeni Water, I also fully understand the meaning and context of General MacArthur’s statement. My stewardship of this organisation would not have been effective or results-producing without your contribution.

Thank you; we are not in a war situation, but you are certainly the troops who make this organisation work – for the people we serve who receive the safe drinking water we produce, for our customers who reticulate the safe drinking water we produce, for our Executive Authority who ensures that we deliver on our mandate and for the Province of KwaZulu-Natal, where economic growth and social development would not have been possible without a sustainable supply of potable water.

There are also two subtle messages in General MacArthur’s statement that reinforce what we already know and subscribe to as the Executive Management and staff of Umgeni Water: that we need and have to share in a common vision and direction if we want to accomplish our objectives, and no leader can succeed without the support of those that he leads. Umgeni Water has one of the most committed teams and, for my part, there will be no need to build a better team from scratch because it already exits – thanks to the hard work done by my predecessors.

From the Desk of the chief executive

It is against this backdrop of continued teamwork and commitment that we have entered the final quarter of the current Financial Year; after a quarter or two in which we have had superb successes, some challenges and failures. The downsides we have experienced can only make us learn from them so that we do not – or try not to – repeat them. Repetition of these failures, though, comes with the risk of serious reputation damage and compromises on our integrity as an organisation.

“The price is too high – we simply cannot afford it.”

Before we move on to organisational expectations for Quarter 4, it is important to reflect on some of activities that were conducted in Quarter 3, in fulfilment of the undertakings I have previously made to share information in order to assist you in making informed decisions in the work place. The past three months were dominated by intensive engagement with stakeholders – both existing and potential – on a wide array of issues, while we simultaneously began establishing relations with like-minded organisations in the African and Asian continents.

Partnership with National Treasury

I currently serve on the Engineering Council of South Africa as its Chairperson and am au fait with the fact that the water sector in our country is facing a serious shortage of experienced

scientists and engineers. It is encouraging that Umgeni Water has entered into a partnership with National Treasury to host a Graduate Development Programme which provides graduate engineers practical work place training for a period of five years.

An event to officially welcome and induct participants into the Umgeni Water-National Treasury Graduate Development Programme was held at the Durban Heights Training Centre, at which I was given the opportunity to address graduate trainees on the important role they can play in the development of our county.

This programme will be invaluable in filling the skills gap that presently exists in the engineering and science professions and will also throw a lifeline to water boards and municipalities that simply cannot attract adequately trained personnel from these disciplines. It is imperative that we continue this partnership with National Treasury because the programme has an important role to play in skills enhancement and socio-economic development.

Msunduzi Local Municipality

Developing and maintaining cordial relations with our stakeholders is paramount to the effectiveness of any large organisation; Umgeni Water is no different because we

rely heavily on our stakeholders to successfully attain our goals. The work we are doing in developing and consolidating stakeholder relations is bearing fruit for Umgeni Water, as is evidenced by the signing of a long-term Bulk Supply Agreement (BSA) between Umgeni Water and the Msunduzi Local Municipality (LM). The signing of a long term agreement for the operation and management of Darvill Wastewater Treatment Works is now within sight. The BSA and imminent O&M for Darvill represent significant breakthroughs in the context of the fact that we had tried to conclude these agreements for several years without success. The BSA with Msunduzi LM means that we now have similar agreements with all six customers.

ILembe District Municipality

Quarter 3 began with a high-level engagement with ILembe District Municipality (DM). The focus of this interaction had been on:

•Audit on water provision during the 2012 summer recess, following the implementation of intervention measures to prevent the possibility of water shortages and supply interruptions occurring again in Ballito.

•Progress with the construction of the Maphumulo Bulk Water Supply Scheme Phase 1

•Progress with Phase 2 of the Maphumulo Bulk Water Supply Scheme which has as its main component the Imvutshane Dam

•The proposed Lower Thukela Bulk Water Supply Scheme, which is one of the largest projects to be implemented by Umgeni Water

The meeting ended on a cordial note, with our customer expressing satisfaction with the projects that are to be implemented in the ILembe District to assist the DM meet increasing demand created by development and the provision, for the first time, of a sustainable supply of water to un-served areas.

uMgungundlovu District Municipality

The healthy relationship we have with uMgungundlovu District Municipality continues unabated, despite major supply-related problems we had experienced

in New Hanover, Dalton, Wartburg, Swayimane and Dingle late last year and in early 2013 as a result of storm damage to our infrastructure and power outages on Eskom’s systems. At our meeting with uMgungundlovu DM we worked constructively through these problems and reached consensus on the measures to be adopted to mitigate the effects, if supply interruptions occurred again. Some of interventions to be implemented are deliberations with Eskom on its plans to mitigate the effects of power supply interruptions; the purchase of generator as back-up for our pump station when power failures occur and, as a sustainable solution, the implementation of the Mshwati Bulk Water Supply Scheme to improve supply to the Wartburg system. An amount of R40 million has already been allocated in our Capex Budget for the design of the Mshwati scheme. We will engage with National Treasury and the uMgungundlovu DM for additional funds that will be required for this project.

Ugu District Municipality

The meeting with the Political Leadership of the Ugu District Municipality was a follow-up to a series of similar interactions that were held in the previous

two quarters. One of the key points of discussion was the reasons for the delay in commissioning the Mhlabatshane Bulk Water Supply Scheme. We provided an assurance to the municipality that the tender process for the re-appoinment of a contractor has been initiated to complete the water works and reservoir, following the liquidation of the previous two contractors. It is expected that the tender will be awarded by this month, and the water works and reservoir are scheduled for completion by February 2014. The delay in the completion of the project continues to cause hardship for the people living in the area as they have to source water, often unsafe to drink, from far off rivers and streams. It was agreed that as an interim solution, a package plant will be installed in order to take water from the dam, treat it and supply it to households in the vicinity of the Mhlabatshane Dam. It was also agreed that both Umgeni Water and Ugu DM would examine the possibility of fast-tracking some of their projects.

eThekwini Metropolitan Municipality

The crucial issues of discussion with the Leadership of eThekwini Metro Municipality (MM) were the upgrade of key infrastructure projects that are

intended to augment supply, among them the Midmar pipelines, and progress being made with the construction of the Spring Grove Dam. We indicated that we were fully aware of the pressure that was being placed on eThekwini MM as a result of the challenges being faced with the upgrade of the Maphephethwa scheme, and provided an assurance that the Executive Management of Umgeni Water was working hard at resolving the issues that exist at Maphephethwa. eThekwini MM was pleased that Umgeni Water was being proactive in addressing its areas of concern.

Potential Customers and StakeholdersAlfred Nzo District Municipality

We continue to develop strong relations with Alfred Nzo District Municipality and to this end we were afforded an opportunity to do a presentation on the Mbizana

Regional Bulk Water Supply Scheme to a sitting of the full Council of Alfred Nzo DM. The presentation highlighted that Phase 1 of the Mbizana BWSS is scheduled for completion by June 2014, and an interim solution, which entails drawing water from the river and then pumping it to the waterworks, has been put in place due to the delay in the completion of the Ludeke Dam. The delay in the completion of the dam was caused by storm damage and the liquidation of the company that won the tender to construct the dam. Handover of the Mbizana BWSS to the Alfred Nzo DM is scheduled for July 2014. Other key issues discussed included whether Alfred Nzo DM had decided on the future operation, maintenance and management of the Ludeke Dam and ancillary infrastructure; and the DM’s state of readiness for the implementation of the reticulation network to be connected to the new bulk infrastructure. The councillors questioned whether the challenges being experienced with the project still persisted – to which Umgeni Water responded that they still existed – and they commended Umgeni Water for the work it was doing in alleviating water backlogs. The progress report presented was greatly appreciated and an invitation was issued to Umgeni Water to do similar presentations to councillors again.

Newcastle LM, Amajuba DM and Umzinyathi DM

Umgeni Water is currently at the stage of developing a strategy to expand its footprint in the whole of KwaZulu-Natal. In order to develop a strategy for growth and expansion,

Senior Staff are involved in regular deliberations on the subject. The primary objective is to investigate viable options for Umgeni Water’s growth and expansion objectives. uThukela Water has been identified as a possible option, and in this regard, the Premier of KwaZulu-Natal, MEC for Co-operative Governance and Traditional Affairs and the Provincial Planning Commission requested both intervention by and assistance from Umgeni Water in resolving water supply and shortage-related problems that exist within the uThukela Water supply area. Umgeni Water is presently conducting a due diligence to determine, among others, the financial position of uThukela Water and the assets that belong to uThukela Water and its customers (Newcastle Local Municipality; Amajuba District Municipality and Umzinyathi District Municipality). After the due diligence has been completed, a report will be prepared and presented to the Office of the Premier and CoGTA, outlining the options available for the takeover of uThukela Water’s bulk function.

As part of reconnaissance and an introduction of Umgeni Water, two meetings have already been held between the Executive Management of Umgeni Water and the Political Leaderships of the municipal customers of uThukela Water. These discussions centred on the nature of Umgeni Water’s organisational structure, business, core functions and competencies as a bulk Water Services Provider. We also informed the Political Leaderships of Newcastle LM,

Amajuba DM and Umzinyathi DM that Umgeni Water has been requested by the Province to assist in finding solutions to water shortages and supply interruptions being experienced in the operational area of uThukela Water. It emerged from these meetings that Newcastle LM does not have, in principle, a problem with working with Umgeni Water as its bulk potable water services supplier and Amajuba DM would welcome assistance from Umgeni Water on capacity building within the DM and suggestions on solutions to ending the supply problems being experienced. Umzinyathi DM was particularly interested in Umgeni Water’s financial position, as it related to borrowings and debt owed to it by its customers. The due diligence will assist the Board and Executive of Umgeni Water in determining the way forward.

Traditional Leadership

In the spirit of consultation, Umgeni Water staff, the Political Leaderships of ILembe District Municipality and Maphumulo Local Municipality held a joint briefing session with residents

and leaders of Maphumulo regarding the construction of the Imvutshane Dam. The primary objectives of the engagement were dissemination of general and safety information regarding the dam construction project; introduction of the contractor to the community, as well as the handover of the dam site to the construction company. In addition, the selection criteria for the project steering committee members and the community liaison officer were provided to community members. The community of Maphumulo provided an assurance that they would accept the appointment of the project steering committee and community liaison officer.

Afriforum

Umgeni Water has made a commitment to support its customers and engage Civil Society on issues pertinent to infrastructure development and water supply. As the

bulk Water Service Provider to Ugu District Municipality, Umgeni Water was invited to attend a meeting with Afriforum, a Civil Society group that deals with service delivery-related issues on behalf of its constituency. The request made of Umgeni Water was to provide details about projects being planned, or are currently underway, to secure and augment supply to the Middle South Coast towns of Scottburgh and Pennington and their surrounds where persistent water supply interruptions had been experienced in December 2012 and January 2013 as a result of damage to infrastructure caused by severe storms. This meeting was part of an information sharing process initiated by Ugu District Municipality to provide assurances to communities that the damaged infrastructure has since been repaired and that water supply has resumed normally. For the purpose of context, the December 2012 storms had damaged the bulk infrastructure of Umgeni Water and the reticulation network of Ugu District Municipality, adversely affecting water supply to homes, the local hospital and businesses. For its part, Umgeni Water was able to repair its bulk infrastructure in a short period of time; however, the reticulation network took longer to fix due to difficulty in locating damaged pipes and obtaining replacement parts. The meeting provided Umgeni Water an opportunity to again express solidarity and support for Ugu District

Municipality as it faced a barrage of questions over service delivery failures, and the actions to be implemented to prevent similar occurrences in future. Umgeni Water provided details of its programme that will assist Ugu District Municipality to minimise the impact of storm damage, if it occurred again. The programme includes: extending the South Coast system in order to feed more water into reservoirs and increasing the number of off-takes on the South Coast Pipeline that will allow additional water to be drawn from this pipeline to supply Middle South Coast towns.

Visitors from Benguela Province in Angola

Umgeni Water and the Office of the Premier of KwaZulu-Natal hosted the Premier of the Province of Benguela, Angola, and representatives of the water sector of that province at a

dinner in Durban. This event was a culmination of various meetings that were held to discuss areas of co-operation between Umgeni Water and Empresa De Aguas E Saneamento (EASBL), a water utility in Benguela, and a scoping study that was undertaken by Umgeni Water at Empresa De Aguas E Saneamento. The scoping study identified several areas of possible skills transfer by Umgeni Water, including assistance with water resource planning, engineering, laboratory establishment and water quality. Communication will be conducted with Empresa De Aguas E Saneamento in order to otain its response to the scoping study, after which the feasibility of a Memorandum of Understanding with that utility will be examined.

Visitors from Japan

A delegation from the Ministry of Land, Infrastructure, Transport and Tourism of Japan (MILT) undertook a site visit to the Wiggins Water Works in order to obtain an understanding of

the role, infrastructure and the operations of Umgeni Water. Additional objectives included the development of synergies and partnerships in areas of common business practice. The key areas of discussion included the establishment of a training programme, from which both Umgeni Water and the Japanese MILT will derive mutual benefit, and benchmarking exercises by both organisations in order to review and refine business processes and co-operation in Research and Development.

Commissioning of Maphumulo Bulk Water Supply Scheme Phase 1

The commissioning of the Maphumulo Bulk Water Supply Scheme Phase 1 took place at a public function in Maphumulo. The Board of Umgeni Water was represented by Nompumelelo Chamane

and Visvin Reddy, while the entire Executive Management of Umgeni Water was also in attendance. The Ilembe District Municipality was represented by its Mayor and senior political leaders and officials, while Civil Society was represented by local Ward Councillors and Traditional Leadership. An estimated 2 000 residents from surrounding areas attended the function, making it one of the most successful to be held jointly by Umgeni Water and ILembe District Municipality. The commissioning function served to highlight the crucial work Umgeni Water is doing in rural development though infrastructure provision and, consequently, uplifting the quality of life of rural communities. This important role of

Umgeni Water was reported extensively on television, eliciting praise for the organisation from several segments of Civil Society. The Maphumulo Bulk Water Supply Scheme is one of the most strategically important projects to be undertaken by Umgeni Water in recent years as the scheme will make a significant contribution to reducing water backlogs in the ILembe District through an estimated 158 000 people ultimately receiving a reliable supply of safe drinking water from the Maphumulo BWSS. This was amply illustrated in all the publicity that was received.

Corporate Social Responsibility

Good progress has been made in the adoption of a structured approach to Corporate Social Responsibility/Investment at Umgeni Water with the approval of a Corporate Social Investment

Policy and the subsequent appointment of a Corporate Social Investment Committee. The committee will receive and deliberate on applications for Corporate Social Investment funding and support before making a recommendation to the Executive. The current budget for Corporate Social Responsibility is R1, 5 million – part of which has already been used to finance three projects:

•The reconstruction of four informal houses in Kenville, Durban

•The provision of a Library Resource Centre at Bazamile Primary School in Molweni, Durban

•The establishment of a small brick-making business in Maphephethwa, Inanda, for unemployed workers from the area

The Library Resources Centre was handed over to the Bazamile Primary School management at a function held there and attended by the local community leadership, officials of the KwaZulu-Natal Department of Education, the school management and members of the Board and Executive Management of Umgeni Water. The facility is equipped with a wide range of books and has computers with internet connectivity. It will be used by staff and learners from the Bazamile Primary School, allowing them access to equipment of this nature for the firm time.

In adopting a formal Corporate Social Investment Policy and supporting projects that are aligned to CSI, Umgeni Water has, for the first time, begun the implementation of a structured approach that, we hope, will make a tangible difference to the environment and to the beneficiaries of the projects we support or finance. I am the first to acknowledge that the budget will not be adequate to meet the needs of all the projects submitted for approval, but it is a start and will be reviewed in the ensuing financial years. It is extremely important that you, as staff and stakeholders, take an active interest in Umgeni Water’s Corporate Social Investment participation, review the work we have done in this area and also make suggestions for changes or improvement. We will now begin both recording and reporting in our coming Annual Reports the initiatives and projects that we have adopted, supported or financed under Corporate Social Responsibility.

National Water Week

One of the key highlights of Umgeni Water’s participation in National Water Week is its hosting of the Umgeni Water Marathon, held at Midmar Dam. The 2013 Marathon attracted a record

1500 entrants in three categories of events and was well organised. The marathon has among its key objectives to promote awareness of water conservation, the importance of water as a catalyst for socio-economic development, the promotion of a healthy lifestyle through participation in sport and family togetherness through participation in sport and outings at a dam resort. Several other National Water Week-aligned events, most of them at schools, were held in conjunction with our customers.

Staff Survey

As you are aware, an internal climate survey was conducted among staff in the first and second quarters of the Financial Year 2012 – 2013 to determine areas of concern, frustration and level

of morale. I would like to place on record my appreciation to those who participated. The survey will become a regular feature in the Business Cycle of the organisation, with one being held every two years. My Executive Management team and I have undertaken to address the critical issues raised by you – and in this regard, an Action Plan has been developed which was presented by the Corporate Stakeholder Manager at the Staff Information Sessions that were held on 26th April 2013. Some progress has already been made in addressing the issues, but please remember that there are no instant or over-night solutions. Some of the issues you had raised require long-term action, and as the Executive we will monitor progress in the months ahead.

The road ahead

On 1st April we entered the 4th Quarter of Financial Year 2012-2013 – as one would say, the final leg of the 12-month relay. It is time to now tie up the loose ends and, before the present

Financial Year comes to a close on 30th June, complete the business that remains unfinished. The past three quarters have been a mix of ups, downs and neutrality, but mainly positive. As we approach the coming two months, I know and am convinced that you will continue to give off your best and keep this organisation on the radar screen as among the best there is in the sector.

Till we communicate again, happy working and I again leave you with the words of General MacArthur, derived from Chinese proverbs: “When the leader’s work is done, people say we did it ourselves.”

Yours in Service Delivery and Meaningful Black Economic Empowerment

Cyril Vuyani Gamede

Chief Executive