MUNICIPAL STATUS QUO REPORT:FOCUS ON SERVICE DELIVERY AND FINANCIAL

MANAGEMENTPRESENTATION TO

PARLIAMENTARY POTFOLIO COMMITTEE ON CoGTA

23 JUNE 2015

OUTLINE 1. MUNICIPAL BACKGROUND2. INSTITUTIONAL CAPACITY3. SERVICE DELIVERY ISSUES3.1 Water and Sanitation3.1.1 s139 Implementation3.1.2 Levels of Access 3.1.3 Status of Water Supply Infrastructure3.1.4 Status of Sanitation Infrastructure3.1.5 Blue and Green Drop Status3.1.6 Water Shortage Hot Spot Areas3.1.7 General Challenges3.1.8 Budgeting 14/15 vs 15/163.2 Roads Infrastructure3.3 Electricity Infrastructure

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OUTLINE…. Cont4. FINANCIAL MANAGEMENT4.1 Revenue Management4.1.1 Budget Revenue4.1.2 Revenue Performance4.1.3 Debtors Age Analysis4.1.4 Challenges4.1.5 Intervention Measures4.2 Expenditure Management4.2.1 Outstanding Creditors4.2.2 Cash Flow Management4.2.3 MIG Performance

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MUNICIPAL BACKGROUND Category B, Grade 4 municipality. Executive Mayoral & Ward Participatory type

system. Madibeng is demarcated into 36 ward with 72

councilors. Predominantly rural municipality with limited

revenue base. 10 urban areas, 21 rural areas, 43 villages &

9000 farm portions. Population estimate 477 381 (2011 census).

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INSTITUTIONAL CAPACITY

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High level organogram comprises of post Municipal Manager, 8 Directorates & 32 Divisional Managers.

Municipal Manager and Five posts of Directors are filled. Vacant posts of Chief Financial Officer, Director: Corporate Support Services and Director: Economic Development, Tourism and Agriculture

26 posts of divisional managers are also filled & 6 are vacant (Local Economic Development, Communications, Fire and Disaster, Internal Audit, Human Resources, Fleet and Facilities).

Other levels of employees: vacancy rate:48%

Sec.139 (1)b IMPLEMENTATION

Municipality’s Water and Sanitation services was placed under s139 of the constitution during 23 March 2015

Department of Water and Sanitation has given Magalies water directive to assist with the operation of bulk services for water and sanitation

Joint Operating Centre has been established by the Province

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LEVEL OF ACCESS TO WATER SERVICES

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Level of Service No. of HouseholdsWater Sanitation

Above RDP 59 628 52 558Basic 73 452 15 590Inadequate /None 27 644 92 576Total 160 724 160 724

STATUS OF INFRASTRUCTURE Total asset value = R584.2 million Total replacement value = R776 million (Source Asset Register 2013/14- GRAP 17)

Status of Brits Water Treatment Plant Supply 60 mega litres and demand 80 Ml per day Demand in peak season 108 mega litres per day Age of equipment exceeded it life span, high maintenance cost

which is also limited due to financial constraints.

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WATER & SANITATION INFRASTRUCTURE … contStatus of Hartbeespoort Water Treatment Plant

Supply 10 mega litres and demand of 11 mega litres per dayDemand in peak season : 15 mega litres per dayAlso under (RBIG) reburshment by DWARand Water bulk augmentation (9Ml/d) Supply of water in rural areas:Municipality currently tankers water to rural areas through 18 hired and 4 owned water costing approximately R2 million p/mWater through tankering supplied to 24984 households

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WATER & SANITATION INFRASTRUCTURE … contWater LossesNetwork losses: 55% unaccounted for water losses Technical losses : 20% Non Technical losses: 35% ( mainly illegal connections)

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WATER & SANITATION INFRASTRUCTURE … contWater supply to ODI areas Bulk supply by City of Tshwane in ODI 1 areas approximately 25

Ml/day Bulk supply by Rand Water in ODI 2 areas approximately 3.5

Ml/day No revenue collections in the area (historically 5% on domestic)Remedial plans: Introduction of flat rate billing in areas currently unmetered as

part of revenue enhancement programme Augmentation of water supply through boreholes in the ff areas:

Majakaneng (in progress), Maboloka (in progress), Mmakau(in progress), Jericho (in progress), Madidi (in progress)

Programme underway for reticulation and installation of meters(Projects ongoing in Hebron, Rockville and Klipgat)

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WATER & SANITATION INFRASTRUCTURE … cont Construction of new reservoir and bulk pipeline in Hebron /

Kgabalatsane (ODI 1) for direct supply to our consumers completed. (Awaiting final connection and commissioning)

Upgrade of the Brits Water Treatment Plant by 20 megalitres per day in progress. Scheduled for completion in August 2017.

Approvals granted for the implementation of the ACIP and MWIG pragrammes with focus also on water conservation and demand management

Low level organogram currently under review to include a demand management team

Status of Brits waste water treatment plant: Capacity – 12 Megalitres /day Current load -9 Megalitres /day Compliance- 30%

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WATER & SANITATION INFRASTRUCTURE … contRietfontein waste water treatment plant: Capacity – 5 Megalitres /day Current load -3 Megalitres /day Compliance- 50%Letlhabile waste water treatment plant: Capacity – 3 Megalitres /day Current load -2 Megalitres /day Compliance- 20%Mothuthlung waste water treatment plant: Capacity – 1 Megalitres /day Current load -0.4 Megalitres /day Compliance- None (Vandalized)

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WATER & SANITATION INFRASTRUCTURE … contRemedial actions in progress Refurbishment of Hartbeestpoort network pump-stations in

progress. A proposed allocation of R7.1 million by DWS Construction of balancing dam at Rietfontein WWTW inlet Refurbishment of vandalized plant-Mothotlung WWTW

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BLUE & GREEN DROP STATUS

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BLUE DROP

WSA LOG POSITION

SCORE 2012 SCORE 2011 SCORE 2010

Madibeng 7 57.93 36.72 4

GREEN DROP

WSA LOG POSITION

SCORE 2013 SCORE 2011 SCORE 2009

Madibeng 9 44 6.6 0

WATER SHORTAGE HOTSPOT AREASArea Affected

householdsintervention Funder Implementing

agentMajakaneng 7261 Boreholes

augmentationDWS (ACIP) & IFM Magalies Water

Mmakau 2703 Boreholes DWS (WSOS) and Bojanala

DWS & BPDM

Letlhabile (centreville, Block F,G & I)

4955 Boreholes DHLG (PIG) Magalies Water

Maboloka 6283 Boreholes DWS ( MWIG) Magalies Water

Letlhakane 908 Boreholes DWS ( MWIG) Magalies Water

Jericho 1800 Boreholes DWS (WSOS) Magalies Water

Madinyane 101 Boreholes DWS ( MWIG) Magalies Water

Madidi 2288 Boreholes DWS DWS northern operations

Oskraal/Robokala 1786 Boreholes Bojanala BPDM16

WATER AND SANITATION CHALLENGES Water treatment Plants are operating beyond their design

limits and are aged Poor raw water quality from the Hartebeesport ( High algal

bloom especially during hot seasons) Lack of Bulk water to meet the demand. Shortage of the requisite skills and staff complement Poor maintenance of infrastructure due to budget constraints Theft and vandalism of water and sanitation infrastructure

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BUDGETING(14/15 vs 15/16) Total 14/15 operating budget of R1.375 billion

comprising of R1 billion own revenue and R375 million, grants and subsidies. Approved 15/16 operation budget R1.523 billion comprising of R1.055 own revenue and R468 million grants and subsidies

Percentage 14/15 allocation for water and sanitation infrastructure maintenance on operating budget is 2 %. Approved allocation for 2015/16 is 7%

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Budgeting(14/15 vs 15/16)..cont Total 14/15 capital budget of

R265.7 million. Approved 15/16 budget R292.4 million

Percentage 14/15 allocation for water and sanitation capex is 37% and the allocation for 15/16 is 39%, excluding grants in kind

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Roads InfrastructureStatus Paved roads 530 km Unpaved roads 1700 km Total Asset Value = R1.5 billionMaintenance budget for 2015/16 increased by 135%

compared to 2014/15 Upgrade programme (including stormwater management)

comprises of 54% of the 2015/16 capital budget

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Electricity Infrastructure Total Asset Value = R400 million Replacement Value = R664 millionMaintenance budget for 2015/16

increased by 30.7% compared to 2014/15

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FINANCIAL MANAGEMENT

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Budgeted Revenue The 2014/15 Total Operating Revenue is

budgeted at R1.3 billion, which comprises of R1.01 billion for internal opreating revenue and R375 miilion for operating grants and subsidies. The total operating represent 73.03 % of the total opreating revenue budget, while the operating grants and subsidies equals to 26.97% of the total operating revenue budget.

Revenue Performance

FINANCIAL MANAGEMENTNW372 Madibeng - Table A1 Budget SummaryDescription

R thousandsOriginal Budget

Adjusted Budget

Current Year 2014/15

% by Revenu

e Source

Cash Receipts to date

% of Receipts against

the Budget

Financial PerformanceProperty rates 251 231 251 231 304 129 30.66% 170 381 56.02Service charges: Electricty 383 677 383 677 450 000 45.36% 388 122 86.24Service charges: Water 82 771 82 771 100 990 10.18% 60 882 60.33Service charges: Sanitation 21 780 21 780 24 633 2.48% 16 075 65.25Service charges: Refuse Removal 23 845 23 845 25 944 2.62% 13 334 51.39Investment revenue 10 304 10 304 3 943 0.40% 4 202 106.56Other own revenue 118 387 121 799 82 460 8.31% 53 846 65.29Total Internal Revenue 891 994 895 407 992 099 100% 706 842 76.07Transfers recognised - operational 327 460 316 983 375 958 Total Budgted Revenue 1 219 454 1 212 762 1 394 012

Operating Grants and subisidies 26.97%Own Operating Revenue 73.03%

2014/15 Medium Previous Year 2013/14

Table A5: Debtors Age Analysis By Revenue Source as at 31 May 2015Details 0-30 Days

 31-60 Days

 61-90 Days

 over 90 days

  Total %

Debtors Age Analysis By Revenue Source

Water Tariffs 11,862,093 12,654,581 12,010,151 163,819,893 200,346,718 18%

Electricity 28,144,370 24,738,698 19,748,847 74,319,516 146,951,430 13%

Property Rates 23,957,619 18,182,407 15,282,765 348,867,679 406,290,470 37%

Sanitation Tariffs 3,038,376 6,213,061 3,503,917 65,885,444 78,640,799 7%

Refuse Removal 2,135,028 1,827,818 1,727,834 68,807,773 74,498,454 7%

Other 8,947,260 7,135,055 7,245,771 174,531,351 197,859,436 18%

Total By Revenue Source 78,084,745 70,751,620 59,519,285 896,231,657 1,104,587,307 100%

Debtors Age Analysis By Customer Group

 

Government 1,354,895 1,327,141 1,851,214 44,050,031 48,583,282 4%

Business 34,065,523 31,009,767 22,166,248 145,711,567 232,953,105 21%

Households 40,598,486 36,773,063 33,928,677 715,270,106 826,570,332 75%

Other 2,065,841 1,641,649 1,573,146 -8,800,047 -3,519,412 0%

Total By Customer Group 78,084,745 70,751,620 59,519,285 896,231,657 1,104,587,307 100%

FINANCIAL MANAGEMENTDebtors age analysis

EXPENDITURE MANAGEMENTOustanding Creditors

Item Detail0 -

30 Days31 -

60 Days61 -

90 Days91 -

120 Days121 -

150 Days151 -

180 Days181 Days -

1 YearOver 1

YearTotal

-0100 Bulk Electricity 13 059 180 22 545 868 10 883 677 8 640 134 0 0 0 0 55 128 8590200 Bulk Water 6 137 914 1 269 855 1 788 524 0 628 322 628 322 628 322 35 647 433 46 728 6920300 PAYE deductions 0 0 0 0 0 0 0 0 00400 VAT (output less input) 0 0 0 0 0 0 0 0 00500 Pensions / Retirement deductions 0 0 0 0 0 0 0 0 00600 Loan repayments 0 0 0 0 0 0 0 0 00700 Trade Creditors 0 0 0 0 0 0 0 0 00800 Auditor General 0 0 0 0 0 0 0 0 00900 Other 3 206 001 3 625 856 3 612 374 2 752 076 1 685 458 1 414 870 0 0 16 296 6351000 Total 22 403 095 27 441 579 16 284 575 11 392 210 2 313 780 2 043 192 628 322 35 647 433 118 154 186TP01 Eskom 13 059 180 12 844 217 10 883 677 8 640 134 0 0 0 0 45 427 208TP02 Department of Water Affairs 0 0 0 0 628 322 628 322 628 322 25 147 433 27 032 399TP03 Sandspruit 0 0 0 0 0 0 0 10 500 000 10 500 000TP04 City of Tshwane - Electricity 0 9 701 651 0 0 0 0 0 0 9 701 651TP05 Magalies Water 1 331 933 1 269 855 1 788 524 0 0 0 0 0 4 390 312TP06 City of Tshwane - Water 2 960 820 0 0 0 0 0 0 0 2 960 820TP07 Rand Water 1 845 161 0 0 0 0 0 0 0 1 845 161TP08 0 0TP09 0 0TP10 0 0TOT Total 19 197 094 23 815 723 12 672 201 8 640 134 628 322 628 322 628 322 35 647 433 101 857 551

Cash flow management

EXPENDITURE MANAGEMENT

Item DetailMonth 1

JulyMonth 2

AugMonth 3

SeptMonth 4

OctMonth 5

NovMonth 6

DecMonth 7

JanMonth 8

FebMonth 9

MarMonth 10

AprMonth 11

May3000 Cash Receipts by Source3010 Property rates 10 845 190 10 414 590 15 321 674 20 324 151 16 478 541 11 569 031 16 255 078 12 540 552 16 959 123 13 341 857 11 924 9723020 Property rates - penalties & collection charges 0 0 0 0 0 0 0 0 0 0 03030 Service charges - electricity revenue 20 898 216 26 713 373 20 881 863 44 736 440 25 079 671 17 913 634 19 703 393 26 661 752 31 946 101 25 605 558 19 896 6873040 Service charges - water revenue 3 711 077 3 768 355 4 001 341 6 678 201 4 985 145 9 782 262 4 509 761 4 396 641 5 120 775 5 785 842 4 441 1503050 Service charges - sanitation revenue 1 116 547 1 221 278 1 117 779 1 906 830 1 619 564 1 273 532 1 415 923 1 271 642 1 372 253 1 539 888 1 230 1173060 Service charges - refuse revenue 1 001 662 1 068 408 1 033 283 1 305 998 1 162 314 929 154 1 120 923 1 073 592 1 332 908 1 103 577 1 065 0773070 Service charges - other 4 210 653 3 775 584 4 120 678 0 10 830 388 5 243 872 9 121 335 5 088 445 1 194 114 7 213 833 613 8813080 Rental of facilities and equipment 0 0 0 0 17 113 88 773 33 611 51 364 37 465 0 69 5963090 Interest earned - external investments 51 439 293 858 258 917 55 750 193 958 330 845 240 925 963 477 0 0 1 160 4793100 Interest earned - outstanding debtors 878 009 797 263 2 166 699 6 144 671 1 965 379 1 033 978 674 246 715 924 800 267 1 117 094 660 9973110 Dividends received 0 0 0 0 0 0 0 0 0 0 03120 Fines 33 795 46 997 112 258 80 658 47 280 38 748 74 35 103 48 396 339 630 84 3093130 Licences and permits 0 339 556 0 0 3 615 849 114 659 150 236 360 293 195 387 237 914 209 6943140 Agency services 0 187 181 0 0 -1 679 0 0 1 104 162 0 616 268 03150 Transfer receipts - operational 146 964 000 3 349 000 0 0 104 993 000 0 0 0 0 0 116 879 0003160 Other revenue 35 706 602 14 020 508 14 468 821 635 911 9 679 475 25 657 496 13 950 001 0 8 258 594 6 775 223 52 484 1523170 Cash Receipts by Source 225 417 190 65 995 951 63 483 313 81 868 610 180 665 998 73 975 984 67 175 506 54 262 947 67 265 383 63 676 684 210 720 1113180 Other Cash Flows/Receipts by Source3190 Transfer receipts - capital 52 507 000 4 915 000 2 000 000 7 000 000 2 000 000 686 000 141 608 000 400 000 40 000 000 0 03200 Contributions recognised - capital & Contributed 0 0 0 0 0 0 0 0 0 0 03210 Proceeds on disposal of PPE 0 0 0 0 0 0 0 0 0 0 03220 Short term loans 0 0 0 0 0 0 0 0 0 0 03230 Borrowing long term/refinancing 0 0 0 0 0 0 0 0 0 0 03240 Increase (decrease) in consumer deposits 0 0 0 0 21 544 0 0 0 0 0 03250 Decrease (Increase) in non-current debtors 0 0 0 0 0 0 0 0 0 0 03260 Decrease (increase) other non-current 0 0 0 0 0 0 0 0 0 0 03270 Decrease (increase) in non-current investments 0 0 0 0 0 0 0 0 0 0 03280 Total Cash Receipts by Source 277 924 190 70 910 951 65 483 313 88 868 610 182 687 542 74 661 984 208 783 506 54 662 947 107 265 383 63 676 684 210 720 1114000 Cash Payments by Type4010 Employee related costs 25 816 333 25 429 254 14 537 987 26 393 980 26 405 227 31 182 564 26 750 063 26 125 970 25 841 281 25 169 364 25 420 6364020 Remuneration of councillors 1 697 817 1 751 290 1 754 201 1 811 079 1 811 081 1 779 841 1 779 841 1 780 808 1 780 808 1 781 763 4 614 7644030 Collection costs 0 0 0 0 0 0 3 838 548 0 0 0 04040 Interest paid 0 0 0 0 0 0 7 321 902 6 613 331 7 321 902 0 7 085 7124050 Bulk purchases - Electricity 96 118 341 52 405 629 30 402 911 33 078 141 44 119 967 36 466 750 14 990 504 44 102 484 17 362 780 16 218 769 64 772 5804060 Bulk purchases - Water & Sewer 1 553 644 13 854 129 0 13 294 230 11 200 000 11 457 124 7 336 932 1 737 708 11 098 804 4 923 992 19 974 6904070 Other materials 1 984 116 3 545 295 0 2 868 821 0 6 500 1 786 710 5 443 606 1 559 675 3 488 053 2 153 3334080 Contracted services 6 352 395 7 825 968 10 734 859 9 892 759 8 220 761 9 187 864 5 588 567 9 666 885 4 654 816 7 872 282 13 779 4154090 Grants and subsidies paid - other municipalities 0 4 726 0 0 1 188 838 0 155 564 1 081 326 1 583 022 248 633 498 2684100 Grants and subsidies paid - other 0 0 0 0 0 0 0 0 0 0 04110 General expenses 84 413 063 5 151 434 2 954 910 3 248 032 41 683 322 26 012 398 9 887 765 10 186 740 35 894 323 2 266 845 9 005 3524120 Cash Payments by Type 217 935 709 109 967 725 60 384 868 90 587 042 134 629 196 116 093 041 79 436 396 106 738 858 107 097 411 61 969 701 147 304 7504130 Other Cash Flows/Payments by Type4140 Capital assets 4 525 260 3 544 007 10 755 809 11 230 606 15 319 953 18 309 413 21 320 890 35 061 432 38 205 110 19 234 253 28 489 9864150 Repayment of borrowing 0 0 0 0 0 0 0 0 0 0 04160 Other Cash Flows/Payments 0 0 0 0 0 0 0 0 0 0 04170 Total Cash Payments by Type 222 460 969 113 511 732 71 140 677 101 817 648 149 949 149 134 402 454 100 757 286 141 800 290 145 302 521 81 203 954 175 794 736

EXPENDITURE MANAGEMENTMIG Performance

YEAR ALLOCATION EXPENDITURE % EXP COMMENTS

2006/07 R67,720,295 R67,720,295 100%

2007/08 R76,098,432 R76,098,432 100%

2008/9 R96,228,023.00 R96,228,023 100%

2009/10 R116,553,000 R116,553,000 100%

2010/11 R136,309,000 R24,733,000 18% Rollover of R111.576,000.00 (Not Approved)

2011/12 R163,940,000 R163,940,000 100%

2012/13 R198,870,000 R198,870,000 100%

2013/14 R220,456,000 R220,456,000 100%

2014/15 R233,615,000 R191,797,915 82.1% Expenditure as at end May 2015R11.079 million withheld by NT

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Challenges

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Data cleansing- Stand Information- Debtor Information- Meter Information- Debtor Profile

There are still challenges with faulty meter, both elctricity and water.

Illegal Connections. There are 6170 prepaid meters not buying electricity and 1086 registering consumption below R50.00

Electricity tarrif dispute by Indudtrialists as they are currently paying 60% of the electricity bill and are high end consumers

Intervention Measures Establishment of Revenue Protection and Enhancement

Technical Committee during May 2015 Commencement of data cleansing on 22 June 2015 Council approved implementation of cost containment

measures on 24 February 2015 per resolution A. 0671 Critical positions have been identified and are currently

in the process of being filled. Five (5) key positions were recently filled (1st June) in the Budget and Treasury Office. The position of CFO has also been advertised.

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