1. Tender Briefing • ________ • Appointment of a Professional Service Provider (PSP) to provide the Water Trading Entity (WTE) with Revenue Management Services to assist in dealing with billing, cost recovery and debt management for a period of two (2) years. • TENDER NO. WP 0625WTE • DEPARTMENT OF WATER AFFAIRS • 23 October 2012 • Mr. Mpho Mofokeng • Deputy Chief Financial Officer 1

2. PRESENTATION OVERVIEW • Background. • Challenges. • Debt Management • Billing Management • Scope of work. • Requirement of the Department • Minimum Month Expectation • Evaluation Process 2

3. Background The Department of Water Affairs is the custodian of South Africa’s water resources. The Department is primarily responsible for the formulation and implementation of water policy as well as for overseeing water service provided by local government. The ambit of the Department s scope is governed , inter alia, by the National Water Act of 1998 (“National Water Act”) which empowers the Department to recover its costs of fulfilling the obligations placed on the Ministry of Water Affairs from Water user through water use charges. 3

4. Debt Management Challenges Department currently has 34109 customer with 68 846customer accounts and a revenue intake of approximately R5.5 billion per annum. The sheer number of customers creates a massive administrative burden of the Department in its pursuit to recover all monies which are due and payable to it. The increase in the administrative burden placed on the Department was a direct consequence of the introduction of the National Water Act which imposed a new charge for Water Resource Act, which required the implementation of the Water Resource Management Charge (WRMC),the number of customer accounts have increased dramatically from 6,500 to 68,000 user accounts. 4

5. Debt Management Challenges Cont. • This increase in water users: • Resulted in Revenue Management administrative burden • also created unforeseen capacity and business process integration challenges for the Department as well as an extra burden on the reconciliation of customer accounts. • As a result, the Department has not been in a position to collect all amounts which are owed to it • which has in turn had an adverse impact on the Department’s bottom line.

6. Billing Management Challenges Cont. The Department currently has the following challenges in terms of the system and data integrity which has resulted in incomplete and inaccurate billing: Incorrect billing of some customers Complete billing of all customers due for billing The mapping of members of Water User Associations and Irrigation Boards to ensure that the Water User Associations are invoice and not their members Water Users are sometimes invoiced on incorrect tariffs or volumes 6

7. Billing Management Challenges Cont. Water Users are not invoiced correctly and billed in the appropriate billing period. The majority of the water users do not inform the Department if there is a change in ownership of their properties. The water users fail to notify the Department if there are changes to the contact details which result in invoices and statements not reaching them. 7

8. Other Revenue Challenges The Department is also facing a massive challenge of unregistered or illegal water users. The Department is aware of water users abstracting water from the Department’s resources illegally for years, which is not only illegal, but also robs the Department of large amounts of revenue which should be entering its coffers. One of the key objectives of the Department is to immediately stop the value leakage posed by the theft of water resources and accordingly this task has been identified by the Department as a priority item. IT System interface challenges Insufficient metering of customers 8

9. Scope of Work The Department’s ability to effectively and efficiently carry out its legislative mandate can be severely hindered by any inability to: Improving revenue billing of all customers Collect the appropriate levels of revenue owed to it; Collect long outstanding debt owed to it; Manage the process of debt collect and debt management; Secure future revenue which it ought to be collecting; Optimize its revenue collection; Transfer of skills to all officials that will take over the functions Head Office Regions Cl.usters 9

10. Management Fees • The administrative fees to be charged and paid to the service provider shall be in line with the Regulations to the Debt Collectors Act. • The service provider will charge the following administrative fees to the debtor: • Necessary ordinary letter, registered letter, facsimile or e mail; • Necessary phone calls; • Other necessary expenses up to a maximum amount as prescribed by the Regulations to the Debt Collectors Act 114 of 1998; • Acknowledgement of debt and undertaking to pay the debt either in installments or to settle the debt; • Correspondence received and attended to; and

11. Management Fees Continues • On request of the debtor, the drawing up and furnishing of a settlement account, other than the six month settlement account • All administrative fees paid by the debtors in the Departments bank account will be paid back to the service provider upon submission of a schedule showing the details of the actions taken. • Commission will be paid over monthly to the Agent within 30 days of receipt of invoice and schedule showing the details of action taken. • N.B The service provider will render its services on a “no collection – no charge” basis for debt collection. However for billing a detail price costing should be submitted with the Bid.

12. The following is the breakdown of the debtor’s book as 31 March 2012

13. FIXED COMMISSION FOR DEBT COLLECTED FROM PUBLIC/GOVERNMENTS INSTITUTIONS ON OLD DEBT

14. FIXED COMMISION FOR DEBT COLLECTED FROM PRIVATE COMPANIES & INDIVIDUALS ON OLD DEBT

15. The evaluation process is divided into three phases. Phase 1: Administrative Compliance Phase 2: Technical\ Functional Compliance Phase 3: Calculation of Price and Preference Evaluation Process 15

16. Prospective service providers must submit the following with their proposals and failure to submit them will render their bids invalid: The service provider (and in the case of a consortium or joint venture – at least one member of such consortium or joint venture) should be registered with the Council for Debt Collectors; The service provider (and in the case of a consortium or joint venture – at least one member of such consortium or joint venture) should have a minimum of 3 years experience dealing with large volumes of debtors. Proof of reference for successful debt collection. Duly completed and signed standard bidding documents (SBD 1 to SBD 9); Phase 1: Administrative Compliance 16

17. Original and valid Tax clearance Certificate; Registration certificates with the relevant council or bodies i.e CIPC,UIF, COIDA Submission of references certificate on recent debt management services Submission of company profile Submission of the lasted audited financial statements Abridged CV’s and profiles of the project team members to be deployed to the Department N.B if the same and CV are used by different service providers the relevant companies will be disqualified Phase 1: Administrative Compliance (Continues) 17

18. PHASE 1: Administrative Compliance (Continues) 18 • Proof/Evidence that the bidder’s company has national representation (not necessary offices) • Proof that the members /staff to be deployed to DWA have SAP knowledge and • SAP certification will add as an advantage in the functionality stage • Submission of the detail costing of the billing project

19. Phase 2: Functional Compliance 19

20. Phase 2: Functional ComplianceContinues 20 Note to Bidders: The bidder is expected to achieve a minimum threshold/required score for functionality of 70% in order to qualify for further evaluation. Further evaluation is based on price (90 points) and preference (10 points) after the minimum score has been achieved by the bidder.

21. Phase 3: Price And Ownership 21 • Proposals that score 70 points or more will be evaluated on price and ownership as follows: • Price (90) • BBBEE (10)

22. Question and Answer 22

23. Thank You 23