PRESENTATION TO THE WATER AND FORESTRY PARLIAMENTARY

PORTFOLIO COMMITTEE

07 MAY 2008SJ SEKGOBELA

CHIEF EXECUTIVE OFFICER

ABOUT MAGALIES WATER

• Magalies Water is a state owned entity (SOE) established in 1969 in terms of the original mandate issued under the Water Act of 1956 and later the Water Services Act 108 of 1997.

• The Board operates in four provincial areas of North West, Limpopo, Mpumalanga and Gauteng.

• The Board is managed from its headquarters based in Rustenburg, North West Province.

• The Board currently serves a number wide range of stakeholders, mines, municipalities etc.

• On average the Board processes and distributes approximately 400 Ml/d of bulk potable water and approximately 50 Ml/d of bulk sanitation to serve about 1.5 million consumers and end users.

Perspective of Magalies Water

Vision

“To be the leading provider of quality water services”

Mission StatementMagalies Water shall, pursue and attain its vision by:

• Optimising operational resources and technologies• Influencing and contributing to healthy water

resources• Ensuring staff equity, competence and capability• Complying with relevant legislation, standards and

guidelines• Building customer and community capacity and

relationships

HEAD OFFICEPhysical Address: 38 Heystek Street Rustenburg [PMG note : photo’s have been removed]

Area of supplyArea of supply

Western region

Eastern region

Area of Operation

• The operational area covers 34 000 km² through abstraction from two major catchments namely the Crocodile and Olifants.

• The Board operates in four provincial areas of North West, Limpopo, Mpumalanga and Gauteng.

Governance

• Board appointed by Minister provides strategic leadership.

• Responsibilities fulfilled in terms good governance.

• Board meeting attendance of 80%.• Board support intellectual contributions to

SAAWU.

Achievements & highlights

• Appointment and management of bulk water and sanitation plants on behalf of municipalities.

• Successful implement of the refurbishment programmes of Vaalkop, Rustenburg and Roodeplat water supply schemes to an amount of R800m.

• Implementation of internship and bursary programmes.

• Implementation of Employee Assistance Programmes.

• Completion of drought relief programmes on behalf of Municipalities.

• All long-term loans redeemed.• Continue operating as a sustainable entity.• Preferred service provider-R760m project with

existing and new mines in the Rustenburg area.• Potential for further growth as Rustenburg is one of

the fastest growing cities.

CORPORATE STRUCTURE

TOTAL STAFF COMPLEMENT: 349

MAGALIES WATER SERVICESMAGALIES WATER SERVICES

• Abstraction • Purification • Storage • Distribution

• Scientific Services

• Sanitation

• Management, training and support services

• Catchment management services

• Water services in joint venture with WSA

• Water conservation functions

• Billing Services/Cost recovery

• Awareness Campaigns (educational)

• Legalizing of illegal connections

• Operation and Maintenance

• Bottled Water

Traditional Bulk Services Value Added Services

Magalies Water operate the following Infrastructure plants

Name Capacity (Ml/day)

Technology

 Vaalkop 1    30 DAF, Ozone, RGS, GAC

Vaalkop 2 & 3 160 DAF, Sedimentation, RGS, Chloramination

Bospooort 12 DAF, GAC, RGS, Chloramination

Klipdrift 18 DAF, RGS, Chlorination

Wallmannsthal 12 DAF, RGS, Chlorination

Cullinan 14 Sedimentation, RGS, Chlorination

Temba 60 DAF, Sedimentation, RGS, UV, Chlorination

Roodeplaat 60 DAF, Sedimentation, RGS, UV, Chlorination

Kloof 2 Sedimentation, RGS, Chlorination

Sewage Treatment Plants

Boitekong 8 Activated Sludge

Rustenburg 1 12 Biofilter

Rustenburg 2 15 Activated Sludge

Rustenburg 3 15 Activated Sludge

Monnakato 2 Oxidation Ponds

Lethabong 2 Activated Sludge

ALIGNMENT TO DWAF OBJECTIVESALIGNMENT TO DWAF OBJECTIVES

• Operations and maintenance of water and sanitation purification plants that belong to different municipalities;

• Twinning agreement with Nkana Water in Zambia;

• Implementer of DWAF drought relief and infrastructure refurbishment.

• Eradication of bucket system and other MDG projects

INFRASTRUCTURE PLAN OVER 3 YEARS.INFRASTRUCTURE PLAN OVER 3 YEARS.

• Vaalkop extension from 210 to 280ML/D (R640m)

• Vaalkop addition of GAC filters (R20m)• Vaalkop laboratory upgrade (R1.2m)• Vaalkop pipeline Cathodic protection

(R2.0m)• Upgrade of Cullinan booster pump

station (R0.4m)• Upgrade of Cullinan bulk pipeline

(R1.3m)

RAW WATER QUALITY AND POTABLE RAW WATER QUALITY AND POTABLE WATER PRODUCED F0607WATER PRODUCED F0607

• Raw water quality in our catchment has continued to deteriorate. The following parameters are of concern:

1.Salination: increasing salt content inwater.

2.Eutrophication: increasing nutrients inwater that result in

algal bloom• MW has however installed new processes such

ozonation and GAC filtration.

RAW WATER QUALITY AND POTABLE RAW WATER QUALITY AND POTABLE WATER PRODUCED F0607WATER PRODUCED F0607

• Total Potable Water samples for F0607 = 8992 and the following compliances were achieved:

1. SANS 241 Class 1 = 99.6%2. SANS 241 Class 2 = 100%• The above indicates that MW still

produces best quality water despite deteriorating raw water quality.

IMPACT OF LOAD SHEDDINGIMPACT OF LOAD SHEDDING

• Loss of revenue;• Increased cost on human utilisation in

terms of paying over time;• Wastage of water on plant start ups due

to inferior quality of water produced;• Increased energy costs as pumps use a

lot of energy on start up;• Pollution of natural resources due to

inferior effluent or raw sewage discharged into water sources.

CONTRACTS WITH MUNICIPLAITIESCONTRACTS WITH MUNICIPLAITIES

• Rustenburg Local Municipality (RLM)• City of Tshwane (CoT)• Madibeng Local Municipality (MLM)• Modemolle Local Municipality (MoLM)• Nokeng Tsa Taemane Local Municipality

(NTTLM)• Thabazimbi Local Municipality (TLM)• Moses Kotane Local Municipality (MKLM)• Moretele Local Municipality (MorLM)• Bela Bela Local Municipality (BBLM)

• Consultation process was followed at inter-Governmental level with Municipalities, National Treasury and SALGA.

• Tariff increases were submitted to the Minister for tabling in Parliament.

• Average tariff increases of 5.83% were kept within the Government Inflation targets of 3%-6%.

• CPIX at 9.8% in February and impact of rising inflation on costs will be absorbed by MW.

• High electricity and fuel costs will have a serious impact on the water tariffs.

WATERWATER PRICINGPRICING

• At the end of the 2007 financial year, qualified Audit opinion were raised on the following items:

- RDP projects performed on behalf of DWAF.- Creditors reconcilliations- Policy on provision for doubtful debts.

• To adress the above qualifications, the following measures were put in place:

- Contracts were obtained from various stakeholders - Reconcilliations are performed and Creditors system is improved to ensure completeness. - A policy on Provision for doubtful debts has been drafted and approved by the Board.

• There is a general improvement of systems and business processes.

FINANCIAL HIGHLIGHTSFINANCIAL HIGHLIGHTS

FINANCIAL HIGHLIGHTSFINANCIAL HIGHLIGHTS

financial performancefinancial performance

Item 2007 2006

Sales 145 322 140 108

Cost of sales 89 169 76 054

Gross profit 56 153 64 054

Investment Income 30 717 19 100

Surplus for the year 42 962 28 788

FINANCIAL HIGHLIGHTSFINANCIAL HIGHLIGHTS

financial positionfinancial position

Item 2007 2006

Property, plant and equipment

609 456 608 334

Investments 283 214 271 216

Total Reserves 903 471 860 509

Total Liabilities 85 190 86 795

THANK YOU