Leonard RadzumaActing CEO

04 May 20171

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Strategic Overview

Pre-determined Objectives (2017-18)

Current Directives on Projects (2017-18)

Scorecard 2017-18

Budget 2017-18

Discussion & Clarifications

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Vision

To be the Leader in the Sustainable Supply of

Water in the Southern Africa Region

Mission

To facilitate water security through the planning,

financing and implementation of bulk raw water

infrastructure, in the most cost-effective manner

that benefits water users

Who is TCTA?

State-owned Water Infrastructure Entity (SPV)

Established in 1986 to fund and implement

RSA portion of LHWP

Mandate expanded to undertake liability

management on LHWP

Now a multi-project entity, to fund &

implement bulk raw water infrastructure

Reports to Minister of Water & Sanitation

Shareholder’s Compact: agreement with

Minister on the expected performance targets

Quarterly Reports to the Minister from Board

What do we do?

Project structuring

Project funding

Project implementation

Liability management

Tariff setting

Advisory services

Knowledge management

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Deliver to Ministerial directives relating to the planning, financing

& implementation of bulk raw water infrastructure, in accordance

with specifications & within agreed timelines & budget.

Ensure that all project activities facilitate social transformation &

build sustainable communities by providing jobs & empowering

women, youth & the disabled.

Operate the business & its projects & processes in a cost-

effective manner, conscious of the imperatives of public finance

management.

Build the knowledge & capability of the organization to support

other water institutions, in pursuit of greater efficiencies in

overall water management & water services delivery.

Ensure the continuous availability of high-calibre human capital

for delivering on organisational mission into the future.

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Outcome Government outcomes TCTA contribution

4 Decent employment through

inclusive economic growth.

Providing cost-effective water

infrastructure as an enabler of economic

growth & jobs.

5 A skilled and capable workforce. Developing entrepreneurship in small

businesses and up-skilling the workforce

to enable South Africa to compete in

world markets.

6 Efficient, competitive and

responsive economic infrastructure

network.

Providing a comprehensive financial and

implementation package to ensure the

most cost-effective solution.

7 Vibrant, equitable and sustainable

rural communities with food security

for all.

Supporting other water sector institutions

to enable them to deliver on their

mandate.

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Outcome Government outcomes TCTA contribution

8 Sustainable human settlements and

improved quality of household life.

Providing affordable infrastructure.

9 A responsive, accountable, effective

and efficient local government

system.

Supporting other water sector

institutions to enable them to deliver on

their mandate.

10 Environmental assets and natural

resources that are well protected

and continually enhanced.

Contributing to the development of

knowledge in the sector (desalination,

water re-use).

12 An efficient, effective and

development-orientated public.

A comprehensive internal training

programme to enable TCTA to deliver

quality products in the most efficient

manner.

Provision of economic opportunities to previously disadvantaged individuals, through preferential procurement.

Development of black businesses through enterprise development, particularly women, youth and people with disabilities.

Job creation and employment of local citizens.

Skills development.

Provision of bursaries to deserving students from previously disadvantaged backgrounds.

Poverty alleviation.

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Under Directives from the Minister, develop infrastructure to meet social and economic demands in the country by:

Raising finance for the construction of infrastructure in the most effective manner.

Developing infrastructure on time, within budget, to the appropriate standard and in a sustainable socio/environmental manner.

Managing the funding and debt on the infrastructure projects in a manner that achieves cost-effective funding, taking into account current and projected market conditions as well as risks.

Undertaking operation and maintenance of designated projects in accordance with DWS specifications.

Ensuring that Acid Mine Drainage is treated to the correct standard before discharging to the environment.

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T C T A

Management of bulk raw water infrastructure projects

Implementation & Funding MandatesAdvisory & New

Mandate

DWS

New:

Mzimvubu

Potential:

Mkhomazi-

KZN;

Berg River

Voelvlei-WC

LHWP

Explicit

Governm

ent

Guarante

ed

+ R 36

billion

1986

2001

BWP

User tariffs

+ R 1,4

billion

2003

-2008

VRESAP

+ R 3,3

billion

2005

-2010

MMTS2

+ R 2 billion

2008

-2016

User tariffsUser tariffs

• Fund

• Risk

mngmnt

• O&M of

assets

• Implement

• Fund

• Risk

mngmnt

•Implement

• Fund

• Risk

mngmnt

• Implement

• Fund

• Risk

mngmnt

2043 2028 2029 2033

Construction info:

CommencedCompleted

Peak of debt

Revenue Recourse

Mandate Activities

Repayment of debt

ORWRDP2B+C

Construction

cost

+ R 10 billion

2C: 2010-15

2B: 2015-21

• 2C: Fiscus

• 2B: User-

funded

• Implement

• Fund

• Risk

mngmnt

2041

KWSAP

+ R 2 billion

2009

-2013

User tariffs

• Implement

• Fund

• Risk

mngmnt

2033

MCWAP 1& 2

Construction

cost

+ R 11 billion

Phase 1:

2011 - 2015

Phase 2:

2017- 2022

User tariffs

& fiscus

• Implement

• Fund

• Risk

mngmnt

2042

AMD

Cost R11 bn

(debt: see

LHWP)

STS: 2013-17

LTS: 2017-21

Part-fiscus,

Part-user

funded

• Implement

Short-term

& Long-

term solution

See LHWP

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Objectives Measures Targets

Ensure financial

sustainability of the

organisation

Cost-effective financial

management in corporate

operations

Actual spend on operational costs is between 90-

100% of budgeted operational costs

A reserve fund of between R30.1 and 34.5 million

created from operational budget savings by 31

March 2018

Sufficient revenue

collected to meet

obligations

An amount of between R5.31 (volumes

2 644mcm) - R5.59 billion (volumes 2 785mcm) is

collected by 31 March 2018.

Capital expenditure

(excluding LHWP2)

(assuming all planned

projects executed

according to expected

timelines. Otherwise

figures to be adjusted in

consultation with the

Board)

Between 90 and 100% of planned expenditure:

R2.36 billion by 31 March 2018

Development of

Sustainable Business

Model

Model approved by Board and recommended to

Minister in October 2017

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Objectives Measures Targets

Manage the

implementation of

projects to meet the

objectives

Achievement of

critical project

milestone dates within

the approved Project

Charter budget

ORWRDP-2C: Ready for Operation is achieved in the

period November and December 2017 (subject to

contractual extensions of time)

MCWAP-2: Final Inception Report submitted in March

2018 (subject to appointment of PSP by October 2017)

AMD-LTS: Final conceptual design and optimisation of

the scheme completed in March 2018 (Subject to the

appointment of PSP in June 2017)

AMD-LTS (EIA): The specialist studies and draft EIA

scoping report complete by March 2018

Mzimvubu Water Project

All Projects

Projected completion within approved project

contingency provision.16

Objectives Measures Targets

Operation and

maintenance of

designated projects

in accordance with

DWS requirements/

specifications

On the Acid Mine

Drainage project,

maintaining or

reducing of water

levels within the mine

voids

In the financial year, treating an

average volume of water in the

Western Basin of between 30 –

33 Ml/d

The water level in the Central Basin

is lowered to between 135 to 140 m

below shaft collar by 31 March 2018

The water level in the Eastern Basin

is lowered to between 10 – 15 m

below ECL by 31 March 2018

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Objectives Measures Targets

Structure project funding

and secure institutional

arrangements and

request necessary

authorisations to allow

funding to be raised

• ORWRDP-2B: Obtain a

borrowing limit

• The borrowing limit is

obtained In the period in the

period December 2017 to

January 2018

• Mzimvubu Water Project:

Submit final funding strategy

to DWS

• The final funding strategy is

submitted to DWS for

approval in May 2017

• AMD-LTS : Negotiate

agreements for use of AMD

water

• Agreements submitted to the

principals for signing in

March 2018

• AMD: Signed AMD Income

Agreement with DWS

• AMD Income Agreement

signed in December 2017

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Objectives Measures Targets

Raise funding for

implementation of

infrastructure (funding

is available for project

implementation

• ORWRDP-2B: Obtain fiscal

funding commitment

• R90m - R117m committed

by DWS in June 2017

• ORWRDP-2B: Availability of

R250 million short-term

funding (dependent on

approval of borrowing limit)

• Agreements effective by Feb

- Mar 2018

• MCWAP: Availability of R100

million bridging facility

(dependent on approval of

borrowing limit)

• Bridging facility available

Feb - Mar 2018

• Vaal River System: funding

facilities available to meet

the 2017/18 R3 200 million

funding requirements for

LHWP and AMD

• Programme Memorandum

for issue of new bonds

registered by June 2017

(subject to signing of

guarantee by Minister of

Finance)19

Objectives Measures Targets

Manage debt within

the approved

borrowing limit and

ensure debt will be

repaid within the

contractual debt

repayment period

• Debt managed within

approved borrowing limits, in

respect of TCTA’s

obligations emanating from:

o VRS

o BWP

o VRESAP

o KWSAP

o MMTS-2

o MCWAP-1

• Debt managed within the

borrowing limits and all

payment obligations are met

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Objectives Measures Targets

Proactively engage

DWS to ensure

positive project

outcomes

• Favourable resolution of critical

project matters identified during the

year

• Favourable resolution of

critical project matters by 31

March 2018, with focus on:

project pipeline, tariff

collection and alignment with

the stakeholder management

strategy

Coordinate and

monitor the efficient

implementation of the

projects within SIP-3

and SIP-18

• Effective coordination of Strategic

Integrated Projects

• Satisfactory feedback from

key partners on the

effectiveness of coordination

with feedback based on the

adequacy of reports on

program progress, quality of

quarterly Project Technical

Forums, and timeousness of

engagements to address and

escalate challenges

Facilitate socio-

economic

development and

transformation

through TCTA

projects

• Achievement of transformation

objectives in terms of BOE JV

participation contract awarded in

the financial year

• Achievement of between 26 to

30% participation

Objectives Measures Targets

To improve the

internal control

environment with

respect to internal

business processes

• Identification of gaps and

weaknesses within internal

control environment

• Unqualified audit opinion

with no repeat findings in

management report from

external auditor

• Satisfactory addressing of

strategic risks

• 66 to 80% of strategic

risks satisfactorily

addressed

• Achievement against IT

strategy and plans

• Integration of three key

business systems

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Objectives Measures Targets

Position TCTA as a

thought leader in critical

aspects of water

security

• Contribution of innovative

papers to reputable technical

publications and conferences

• Four thought-leading

papers written and

submitted

Ensure organisational

culture is in support of

business strategy

• Assessment of employee

engagement

• Survey report with

recommended actions

plan delivered to

EXCO by 30

November 2017

Improvement of

succession planning

within the organisation

• Succession cover ratio (ready

within 12 months) for critical

positions

• 35% cover ratio of

critical positions

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Partnering the stakeholders to address current water deficiencies

Establishment of intergovernmental partnerships and strengthening of relationships with DWS

Optimisation of resources in an enhanced work environment

Business process improvements

Exploring other business opportunities

Enhancement of the TCTA brand

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Actual/Forecast

2016/17Budget 2016/17 Budget 2017/18

Tariff Receivable ( 5 616,26) ( 5 242,78) ( 5 626,44)

Running Expenditure

1 671,61 1 733,66 2 142,74

Operating Inflows/Outflows ( 3 944,65) ( 3 509,12) ( 3 483,70)

Total Finance Charges (incl. AG8) (1 116,32) 2 850,55 (6 809,58)

Net Working Capital Cash (in)/outflows ( 5 060,97) ( 658,57) (10 293,29)

Capital Refinancing 799,67 3 585,37 2 708,43

Fixed Assets 13,68 22,22 10,28

Capital Expenditure 1 040,73 4 880,46 3 393,62

Non cash flow items and accruals ( 3 239,92) (102.27) (9 030,45)

TOTAL FUNDING REQUIREMENT 33,03 7 931,75 4 866,73

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