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Appraisal

Presentation to. PORTFOLIO COMMITTEE. 18 April 2013. Appraisal. CONTENTS. Item Slide(s) Overview 3 Feedback on issues raised by PC in 2012 4 Annual Report 2011/12 – Income Statement 5 Annual Report 2011/12 – Cash Flow Statement 6

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Appraisal

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  1. Presentation to PORTFOLIO COMMITTEE 18 April 2013 Appraisal

  2. CONTENTS ItemSlide(s) Overview 3 Feedback on issues raised by PC in 2012 4 Annual Report 2011/12 – Income Statement 5 Annual Report 2011/12 – Cash Flow Statement 6 Annual Report 2011/12 – Balance Sheet 7 Annual Report 2011/12 – Audit Report 8 Annual Report 2011/12 – Objectives & KPIs 9 CAPEX 10 - 11 Strategic Objectives 2012/2013 12 Progress Achieving Objectives 2012/13 13 Bulk water tariff increases 2013/14 14 Adjusted bulk water tariff increases 2013/14 15 Alignment with Government Outcomes 16 Strategic Focus 2013/14 17 Current Challenges 18

  3. OVERVIEW • Provide Bulk potable water to the towns of Caledon (Theewaterskloof LM), Heidelberg & Slangriver (Hessequa LM) • Provide Retail potable water to rural areas around Caledon (Theewaterskloof LM), Bredasdorp & Waenhuiskrans (Cape Agulhas LM), Swellendam (Swellendam LM), Heidelberg & Witsand (Hessequa LM). • Retail water provided to ± 850 clients over a pipe network of ± 1400 km. Ultimate Target: Towns -75% Rural – 80%

  4. FEEDBACK ON ISSUES RAISED BY PC IN 2012 • CAPEX underspending – decision to delay capital plan and embark on implementation of asset management system (Municipal Assistant) to provide more informed plan; funding required to complete implementation.

  5. ANNUAL REPORT 2011/12 – Income Statement • Consolidated Income Statement • INCOME • EXPENSES

  6. ANNUAL REPORT 2011/12 – Cash Flow Statement • Cash & Investments • Reserved for

  7. ANNUAL REPORT 2011/12 – Balance Sheet • CAPITAL EMPLOYED • R83 639 461 • EMPLOYMENT OF CAPITAL

  8. ANNUAL REPORT 2011/12 – Audit Report • Unqualified Audit Report • Annual report not available in time of audit due to staff shortage • Performance Management (not influencing audit opinion): • Not fully comply • Auditors report quarterly to Auditor General on progress regarding compliance • With each quarter progress is made

  9. ANNUAL REPORT 2011/12 – Objectives & KPIs

  10. CAPEX • BUDGETED VS ACTUAL 2011/2012 • Budgeted BP = R7 514 000 - Actual = R5 079 670 (68%) • Available capital for infrastructure limited – very careful planning needed as well as reserve for emergencies. • Decided on Extensive Asset Management System (Municipal Assistant) • Phase 1 (production) 100% completed & Phase 2 (retail) only 1/3 completed. Funding required to complete.

  11. CAPEX

  12. STRATEGIC OBJECTIVES 2012/13 • Ensure access to potable water in area of service • To manage financial affairs to meet current and future obligations • To operate, maintain, develop and refurbish infrastructure • To be an aligned and effective institution • To empower and develop employees

  13. PROGRESS ACHIEVING OBJECTIVES 2012/13 YTD DEC 2012

  14. BULK WATER TARIFF INCREASES 2013/14 • Proposed bulk water tariff increases for 2013/14 (based on consecutive increases of 16%): • Heidelberg & Slangrivier: R4.84 – R5.57 per m3 = 15.08% (73c/m3) increase • Caledon: R4.11 – R4.77 per m3 = 16.06% (66c/m3) increase • Excludes allocation based basic levy as well as capital levy of 25c/m3 • Motivation: • Increases of above inflation for certain input costs (especially electricity, chemicals & labourequalling about 78% of total operational cost of bulk provision (excluding depreciation). • Urgent need for capital to do infrastructure refurbishment. Even with proposed tariff increase for 2013/14 and similar increases thereafter, capital will still be insufficient.

  15. ADJUSTED BULK WATER TARIFF INCREASES 2013/14 • Adjustment to proposed bulk water tariffs for 2013/14 due to Eskom reduced increase: • Overberg Water Board financial year starts 1 July • Eskom financial year starts 1 April • Based on a 9.6% Eskom tariff increase from 1 April 2013 as well as 1 April 2014, the effective increase will be 12.23% for Overberg Water for the 2013/14 financial year (consecutive increases of 16% provided for in budget) • Result in a decrease in electricity budget of R214 674 • Result in a decrease of 5c/m3 on the proposed tariff • Heidelberg & Slangrivier: R4.84 – R5.52 per m3 = 14.05% (68c/m3) increase • Caledon: R4.11 – R4.72 per m3 = 14.84% (61c/m3) increase • Due to the negligible saving, Overberg Water requests that the initially proposed tariffs are left unchanged in the light of capital needs for infrastructure refurbishment. • Otherwise Overberg Water Board will give rebate of 5c/m3 on actual consumption.

  16. ALIGNMENT WITH GOVERNMENT OUTCOMES • Overberg Water contributes to the Ministerial Programme of Action as follows: • Outcome 7: Vibrant, Equitable and Sustainable Rural Communities with Food Security for All • Partnering with local municipalities to ensure rural communities have access to potable water (Witsand/Slangrivier). Operational support Hessequa and Kannaland LMs. • Administer the distribution and installation of rain water harvesting tanks. • Retail client base is largely commercial farmers, providing employment and food security. • Training initiatives undertaken with internal and government funding leading to permanent and fixed-term employment opportunities. • Outcome 10: Environmental Assets and Natural Resources that are well protected and continually enhanced • Delivering Class 1 potable water. • Employing new technology in water purification (UF plant) to reduce use of chemicals. • Water conservation and demand management initiatives.

  17. STRATEGIC FOCUS 2013/14 • Compilation of regional water services master plan in conjunction with DMs and LMs • Securing income stream • Investigating access to and applying for capital funding • Targeted increase in staff complement • Complete implementation of Performance Management System • Continued training to address skills shortage in water sector (Process Controllers) • Continued support to DWA and wider water sector participation

  18. CURRENT CHALLENGES • Access to capital • Sustainability of Tariffs • Ability of consumers to pay • Ability of Overberg Water to absorb above-inflation increases • Increasing the staff complement amid financial constraints • Staff complement must increase to maintain service standards, assist municipalities and comply to regulatory, legal and audit requirements.

  19. THANK YOU

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