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PRESENTATION TITLE Presented by: Name Surname Directorate Date 202021 Cumulative third quarter report of the Department of Water Sanitation Presented by: T I Balzer Acting Director-General 09 March 2021 For the period 01 July to 31
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01
PRESENTATION TITLE
Presented by:
Name Surname
Directorate
Date 2020/21 Cumulative third quarter report of the Department of Water & Sanitation Presented by:
T I Balzer
Acting Director-General 09 March 2021 For the period 01 July to 31 December 2020<br>
Presented by:
Name Surname
Directorate
Date 2020/21 Cumulative third quarter report of the Department of Water & Sanitation Presented by:
T I Balzer
Acting Director-General 09 March 2021 For the period 01 July to 31 December 2020<br>
02
Contents Purpose………………………………………..…….…………………………..…3
Overview of non-financial performance ……………….………..………………4
Overview of the overall second quarter performance of the Department......5
Overview of the overall third quarter performance of the Department......….6
Consolidated progress in implementing the 2017 preferential procurement regulations …………………………………………………………………………7
Summary of cumulative achievements…………………………..……..…........8-10
Details on Areas of partial and non-achievement per programme …...........11-19
Part 2: overview of financial performance……………………….……………..20-39
Overview of DORA Infrastructure Grants Financial Performance …………..40-51 2<br>
Overview of non-financial performance ……………….………..………………4
Overview of the overall second quarter performance of the Department......5
Overview of the overall third quarter performance of the Department......….6
Consolidated progress in implementing the 2017 preferential procurement regulations …………………………………………………………………………7
Summary of cumulative achievements…………………………..……..…........8-10
Details on Areas of partial and non-achievement per programme …...........11-19
Part 2: overview of financial performance……………………….……………..20-39
Overview of DORA Infrastructure Grants Financial Performance …………..40-51 2<br>
03
Purpose To brief the Portfolio Committee on the Department of Water and Sanitation’s cumulative third quarter performance for the 2020/21 financial year 3<br>
04
overview of non-financial performance 4 Overview of the Overall second and third quarter performance
progress in implementing the 2017 preferential procurement regulations
Summary of achievements for the quarter<br>
progress in implementing the 2017 preferential procurement regulations
Summary of achievements for the quarter<br>
05
Overview of the overall second quarter performance of the Department 5<br>
06
Overview of the overall third quarter performance of the Department 6<br>
07
Consolidated progress in implementing the 2017 preferential procurement regulations Cumulative third quarter procurement Consolidated third quarter procurement per B-BBEE status level 7 Legend:
Exempted Micro Enterprise (EME): annual turnover of R10 million and below;
Qualifying Small Enterprise (QSE): annual turnover between R 10million and R50 million;
Generic enterprise: annual turnover above R50 million 33% was achieved from a target of 30% 26% was achieved from a target of 15% 7% was achieved from a target of 15%<br>
Exempted Micro Enterprise (EME): annual turnover of R10 million and below;
Qualifying Small Enterprise (QSE): annual turnover between R 10million and R50 million;
Generic enterprise: annual turnover above R50 million 33% was achieved from a target of 30% 26% was achieved from a target of 15% 7% was achieved from a target of 15%<br>
08
summary of cumulative achievements per programme 8<br>
09
Summary of cumulative achievements 9<br>
10
Summary of cumulative achievements 10<br>
11
Details on Areas of partial and non-achievement per programme 11<br>
12
Administration sub-programmes 12<br>
13
Administration sub-programmes 13<br>
14
Water Planning & Info Mgt. sub-programmes 14<br>
15
Water Planning & Info Mgt. sub-programmes 15<br>
16
Water Infrastructure Development sub-programmes 16<br>
17
Water Infrastructure Development sub-programmes 17<br>
18
Water Infrastructure Development sub-programmes 18<br>
19
Water Sector Regulation sub-programmes 19<br>
20
Part 2: overview of financial performance 20 Overview main account expenditure
Overview water trading expenditure<br>
Overview water trading expenditure<br>
21
Quarter 2 Overview Expenditure 21 The department’s expenditure for the period ended 30 September 2020 amounted to R6.282 billion, representing thirty-seven per cent (37%) of the total adjusted appropriation of R16.959 billion, leaving total unspent funds of R10.677 billion.
When compared to the approved revised drawings to date of R8.284 billion (49%), the department reflected an under-expenditure of R2.001 billion or twelve per cent (12%). There were significant cumulative variations from projected spending within the various budget economic classifications:
Compensation of employees was below projected spending by R158.641 million, the under- spending is affected mainly by halted recruitment during lockdown, reduced rate of filling vacancies consequent to mandatory outer years CoE budgets by National Treasury and outstanding cost of living adjustments including 2019/20 and pay progressions.
Goods and services below approved drawings by R22.675 million. The under-spending is owing to invoices still to be certified and processed for goods delivered and/or services rendered relating to operational expenditures required for the running of the department like Office Accommodation, Consultants, Communication, Cleaning Services, Security Services and Information Technology related services.
Transfers and subsidies below drawings by R152.018 million, this is mainly due to the outstanding transfers to Municipalities, households were more due to retirements and resignations leave gratuities.
Payments for capital assets were below drawings by R1.668 billion, the significant contributor is the indirect grant allocation to Municipalities.
Effect of Covid-19 lockdown on the economy affected financial performance of the department for the 2020/21 financial year.<br>
When compared to the approved revised drawings to date of R8.284 billion (49%), the department reflected an under-expenditure of R2.001 billion or twelve per cent (12%). There were significant cumulative variations from projected spending within the various budget economic classifications:
Compensation of employees was below projected spending by R158.641 million, the under- spending is affected mainly by halted recruitment during lockdown, reduced rate of filling vacancies consequent to mandatory outer years CoE budgets by National Treasury and outstanding cost of living adjustments including 2019/20 and pay progressions.
Goods and services below approved drawings by R22.675 million. The under-spending is owing to invoices still to be certified and processed for goods delivered and/or services rendered relating to operational expenditures required for the running of the department like Office Accommodation, Consultants, Communication, Cleaning Services, Security Services and Information Technology related services.
Transfers and subsidies below drawings by R152.018 million, this is mainly due to the outstanding transfers to Municipalities, households were more due to retirements and resignations leave gratuities.
Payments for capital assets were below drawings by R1.668 billion, the significant contributor is the indirect grant allocation to Municipalities.
Effect of Covid-19 lockdown on the economy affected financial performance of the department for the 2020/21 financial year.<br>
22
Cumulative expenditure against the adjusted budget 22<br>
23
Quarter 2 expenditure against budget / drawings 23<br>
24
24 Quarter 2 Earmarked Appropriated Infrastructure Items<br>
25
Water Trading structure 25<br>
26
26<br>
27
Narratives on Income & Expenditure The revenue billing performance to date reflects 100% on year to date revenue target (R6.146 billion) and the actual billing was R6.161billion. The percentage of annual billing is 57% on the annual budget of R10.792 billion.
Revenue collection remains a challenge. However, on-going interventions to improve debt management through improved debt management processes, including the in the Provinces, had been initiated. During the month of September 2020, an amount of R1.172 billion was collected from trade customers.
The augmentation revenue of R1.886 billion has been claimed and received from the Budget Vote (100% of the year to date budget).
The actual administration costs reflect 19% on annual budget and the implementation of water resource management activity reflects a spending of 40% against the allocated budget which mainly be attributed to the entity being under lockdown.
The operations, maintenance and refurbishment of national water resources schemes reflect a 12% spending against annual budget. The objective is reflecting minimal spending and this can mainly be attributed to the entity being under lockdown.
The financing and investment in raw water infrastructure reflects R3.853 billion, a 53% billing against annual budget. The objective relates to payment made to TCTA for repayment of loans, interest and management fees.
Bulk water supply to strategic users reflects a 17% spending against annual budget. There is low spending on maintenance & repairs due to some activities being halted as a result of the lockdown. 27<br>
Revenue collection remains a challenge. However, on-going interventions to improve debt management through improved debt management processes, including the in the Provinces, had been initiated. During the month of September 2020, an amount of R1.172 billion was collected from trade customers.
The augmentation revenue of R1.886 billion has been claimed and received from the Budget Vote (100% of the year to date budget).
The actual administration costs reflect 19% on annual budget and the implementation of water resource management activity reflects a spending of 40% against the allocated budget which mainly be attributed to the entity being under lockdown.
The operations, maintenance and refurbishment of national water resources schemes reflect a 12% spending against annual budget. The objective is reflecting minimal spending and this can mainly be attributed to the entity being under lockdown.
The financing and investment in raw water infrastructure reflects R3.853 billion, a 53% billing against annual budget. The objective relates to payment made to TCTA for repayment of loans, interest and management fees.
Bulk water supply to strategic users reflects a 17% spending against annual budget. There is low spending on maintenance & repairs due to some activities being halted as a result of the lockdown. 27<br>
28
Quarter 3: Overview of expenditure 28 The department’s expenditure for the period ended 31 December 2020 amounted to R9.806 billion, representing fifty-eight per cent (58%) of the total adjusted appropriation of R16.994 billion, leaving total unspent funds of R7.188 billion.
When compared to the approved revised drawings to date of R13.027 billion (77%), the department reflected an under expenditure of R3.221 billion or nineteen per cent (19%). There were significant cumulative variations from projected spending within the various budget economic classifications:
Compensation of employees was below projected spending by R236.093 million, the under spending is affected mainly by reduced rate of filling vacancies consequent to mandatory outer years CoE budgets by National Treasury and outstanding cost of living adjustments including 2019/20 and pay progressions.<br>
When compared to the approved revised drawings to date of R13.027 billion (77%), the department reflected an under expenditure of R3.221 billion or nineteen per cent (19%). There were significant cumulative variations from projected spending within the various budget economic classifications:
Compensation of employees was below projected spending by R236.093 million, the under spending is affected mainly by reduced rate of filling vacancies consequent to mandatory outer years CoE budgets by National Treasury and outstanding cost of living adjustments including 2019/20 and pay progressions.<br>
29
Quarter 3: Overview of expenditure (Cont…) 29 Goods and services exceeded approved drawings by R253.723 million. The over-spending is due to:
Processing of certified invoices relating to the drought and emergency water services interventions activities (Water tankering, procurement of water tanks for rain water harvesting and project management fees) in various regions in the country, and integrated Vaal River System (VRS) pollution remediation project operational expenditure.
The increased spending during the third quarter is attributed to the additional budget of R306.534 million received as roll-over for the country-wide Covid-19 and drought emergency interventions.
The National Treasury approved the conversion of R314 million allocated for payment for capital assets within the Schedule 6B of the Regional Bulk Infrastructure Grant (RBIG) for the defrayment of operational expenditure related to labour, purification, security, transportation and management of:
Biosolids,
Operations and maintenance of infrastructure,
Consumables and other sundry payments related to non-capital components of the integrated Vaal River System (VRS) pollution remediation intervention.<br>
Processing of certified invoices relating to the drought and emergency water services interventions activities (Water tankering, procurement of water tanks for rain water harvesting and project management fees) in various regions in the country, and integrated Vaal River System (VRS) pollution remediation project operational expenditure.
The increased spending during the third quarter is attributed to the additional budget of R306.534 million received as roll-over for the country-wide Covid-19 and drought emergency interventions.
The National Treasury approved the conversion of R314 million allocated for payment for capital assets within the Schedule 6B of the Regional Bulk Infrastructure Grant (RBIG) for the defrayment of operational expenditure related to labour, purification, security, transportation and management of:
Biosolids,
Operations and maintenance of infrastructure,
Consumables and other sundry payments related to non-capital components of the integrated Vaal River System (VRS) pollution remediation intervention.<br>
30
Quarter 3: Overview of expenditure (Cont…) 30 Interest and rent on land: Interest paid relates Telkom account unpaid during lockdown, credit note was subsequently provided to reverse the interest charge.
Transfers and subsidies below drawings by R899.058 million, this is mainly due to the withholding of conditional grants transfers where Municipalities reported significant under expenditure on the previous periods transfers.
Payments for capital assets were below drawings by R2.339 billion, the significant contributor is the indirect grant allocation to Municipalities. The current capital (Infrastructure) commitments balance amounts to R4.885 billion.
c) The ripple effect of Covid-19 on the economy affected financial performance of the department for the 2020/21 financial year.<br>
Transfers and subsidies below drawings by R899.058 million, this is mainly due to the withholding of conditional grants transfers where Municipalities reported significant under expenditure on the previous periods transfers.
Payments for capital assets were below drawings by R2.339 billion, the significant contributor is the indirect grant allocation to Municipalities. The current capital (Infrastructure) commitments balance amounts to R4.885 billion.
c) The ripple effect of Covid-19 on the economy affected financial performance of the department for the 2020/21 financial year.<br>
31
Cumulative expenditure against the adjusted budget 31<br>
32
Quarter 3 expenditure against budget / drawings per month 32<br>
33
33 Quarter 3 Earmarked Appropriated Infrastructure Items<br>
34
34<br>
35
Narratives on income & expenditure In summary, the revenue billed (R9.237 billion) to date reflects a performance of 114% on year to date budget (R8.094 billion) and a performance of 86% on annual target of R10.792 billion.
Revenue collection remains a challenge however on-going interventions to improve debt management through improved debt management processes including the units specifically in the Provinces had been initiated.
During the month of December an amount of R1.194 billion was collected from trade customers. The augmentation revenue of R2.378 billion has been claimed and received from the Budget Vote (100% of annual budget).
Total expenditure incurred was 57% against the annual expenditure budget for the 2020/21 financial year.
The actual administration costs reflect 49% on annual budget and the implementation of water resource management activity reflects a spending of 55% against the allocated budget and this can mainly be attributed to the entity being under lockdown.
The operations, maintenance and refurbishment of national water resources schemes reflect 25% spending against annual budget. The objective is reflecting minimal spending and this is mainly be attributed to the entity being under lockdown.
The financing and investment in raw water infrastructure reflects R5.849 billion, which is 81% billing against annual budget. The objective relates to payment made to TCTA for repayment of loans, interest and management fees.
Bulk water supply to strategic users reflects 26% spending against annual budget. There is low spending on maintenance & repairs due to some activities being halted as a result of the lockdown. 35<br>
Revenue collection remains a challenge however on-going interventions to improve debt management through improved debt management processes including the units specifically in the Provinces had been initiated.
During the month of December an amount of R1.194 billion was collected from trade customers. The augmentation revenue of R2.378 billion has been claimed and received from the Budget Vote (100% of annual budget).
Total expenditure incurred was 57% against the annual expenditure budget for the 2020/21 financial year.
The actual administration costs reflect 49% on annual budget and the implementation of water resource management activity reflects a spending of 55% against the allocated budget and this can mainly be attributed to the entity being under lockdown.
The operations, maintenance and refurbishment of national water resources schemes reflect 25% spending against annual budget. The objective is reflecting minimal spending and this is mainly be attributed to the entity being under lockdown.
The financing and investment in raw water infrastructure reflects R5.849 billion, which is 81% billing against annual budget. The objective relates to payment made to TCTA for repayment of loans, interest and management fees.
Bulk water supply to strategic users reflects 26% spending against annual budget. There is low spending on maintenance & repairs due to some activities being halted as a result of the lockdown. 35<br>
36
Reactivation and Recovery (Financial/Budget/ Procurement) Corporate Balanced Scorecards, Shareholder Compact and Budgets for Entities have been revised for deliverables and targets which have been impacted by COVID-19 pandemic, with concomitant budget adjustments.
During the period under review, the Department developed an exit plan to phase-out the water tankering services and thus managing disruption of water provision to the Communities during and post the COVID-19 lockdown periods.
Developed Consolidated Procurement Recovery aligned with the budget and it encompasses work carried out by the Department, Construction Unit, Implementing Agents inclusive of both empowerment and stakeholder engagements plans.
Human Resources Management encompassing recruitment plan and organisational structure alignment initiatives are being implemented in consultation with the DPSA. 36<br>
During the period under review, the Department developed an exit plan to phase-out the water tankering services and thus managing disruption of water provision to the Communities during and post the COVID-19 lockdown periods.
Developed Consolidated Procurement Recovery aligned with the budget and it encompasses work carried out by the Department, Construction Unit, Implementing Agents inclusive of both empowerment and stakeholder engagements plans.
Human Resources Management encompassing recruitment plan and organisational structure alignment initiatives are being implemented in consultation with the DPSA. 36<br>
37
5. AN OVERVIEW OF GRANTS PERFORMANCE 2021/03/09 37 OVERVIEW OF DORA INFRASTRUCTURE GRANTS FINANCIAL PERFORMANCE
ADDITIONAL SLIDES<br>
ADDITIONAL SLIDES<br>
38
RBIG 5B Financial Performance Per Province 2nd Quarter 38<br>
39
RBIG 6B Financial Performance per province 2nd Quarter 39<br>
40
WSIG 5B Financial Performance Per Province 2nd Quarter 40<br>
41
Consolidated Water Services Infrastructure Grant: Indirect Grant Financial Performance Per Province 2nd Quarter 41<br>
42
WSIG 6B Financial Performance Per Province 2nd Quarter 42<br>
43
Bucket Eradication Programme (BEP) 6B Financial Performance Per Province 2nd Quarter 43<br>
44
RBIG 5B Financial Performance Per Province 3rd Quarter 44<br>
45
RBIG 6B Financial Performance Per Province 3rd Quarter 45<br>
46
Consolidated Water Services Infrastructure Grant: Indirect Grant Financial Performance per province 3rd quarter 46<br>
47
WSIG 6B Financial Performance Per Province 3rd Quarter 47<br>
48
Bucket Eradication Programme (BEP) 6B Financial Performance Per Province 3rd Quarter 48<br>
49
Part 3: overview of financial recovery 49<br>
50
Summary of status report 50<br>
51
Financial highlights (Main Account) 51<br>
52
Financial highlights (WTE) 52<br>
53
Irregular Expenditure Condonations 53<br>
54
Irregular Expenditure Condonations 54<br>
55
Thank you 55<br>