Creating Value

Product Quality

In the reporting period, 13 Umgeni Water bulk water supply systems and four (4) uMgungundlovu District Municipality (UMDM) schemes were monitored and reported against the five (5) categories as specified in SANS 241:2015. 

One of UMDM schemes, Appelsbosch WTW, was decommissioned in December 2019 with the Appelsbosch area now receiving water from the uMshwathi BWSS.

In March 2019, Umgeni Water acquired three (3) small Water Treatment Works (WTWs) schemes from UThukela District Municipality (uTDM) including Ezakheni WTW, Olifantskop WTW and Thukela Estates WTW. These schemes were also monitored and reported against the five (5) risk categories as specified in SANS 241:2015. 

Umgeni Water intends to assess, maintain and refurbish or consolidate these schemes to provide a more sustainable bulk water solution to the areas supplied by the schemes in a similar manner that has been accomplished with the UMDM schemes.

Overall, compliance of the Umgeni Water bulk potable water supply systems was excellent for the period under review.

In order to maintain and enhance the condition of core infrastructure that supports customer service levels, the entity invested a total of R231 million in maintenance of water and wastewater treatment assets during this period. Maintenance investment has been consistent over the past five years,

with greater than 5.5% of revenue and 2.6% of Property, Plant and Equipment spent, thereby continuing to assure system reliability.

Customer Satisfaction

This financial year under review coincided with an improvement in sales growth. Bulk potable water treated and supplied from 20 water treatment works systems, totalled 509 million cubic metres (1395 Ml/d) for the year, a 8% increase from the prior year (472 million cubic metres in 2019). 

Bulk wastewater treated over this period was 32 million cubic metres per annum (89 Ml/d), which are at levels similar to prior year.

In the year there were two (2) unplanned supply disruptions of six (6) supply days in two (2) of the 17 supply systems, namely Maphumulo and Maphephetheni. The supply disruption at Maphumulo WTW was due to delayed power reconnection to the national grid. The disruption at Maphephetheni WTW was due to human error. 

Supply was successfully restored at both systems and appropriate actions were followed to ensure continuity of supply.

Stakeholder Understanding and Support

There was regular engagement with a wide range of stakeholders during the year. Stakeholders were also interested in future assurance of supply, asset management, capital infrastructure plans and future tariff charges, as well as, opportunities for growth, jobs and partnerships.

Community and Environmental Sustainability

Leveraging off its capital expenditure and other programmes Umgeni Water continued to facilitate participation of targeted enterprises in the economy. Its Contract Participation Goal target of ≥ 35% for construction contracts and professional services was well met in the reporting year, with 35% (R335 million) orders made to black-owned enterprises, of which R165 million (49%) benefited women owned enterprises. 

Stakeholder Understanding and Support

There was regular engagement with a wide range of stakeholders during the year. Stakeholders were also interested in future assurance of supply, asset management, capital infrastructure plans and future tariff charges, as well as, opportunities for growth, jobs and partnerships.

Community and Environmental Sustainability

Leveraging off its capital expenditure and other programmes Umgeni Water continued to facilitate participation of targeted enterprises in the economy. Its Contract Participation Goal target of ≥ 35% for construction contracts and professional services was well met in the reporting year, with 35% (R335 million) orders made to black-owned enterprises, of which R165 million (49%) benefited women owned enterprises. 

A total of 268 temporary Capex Programme jobs were created in the year with R11.3 million paid in wages to local labour.

Infrastructure Stability

During this reporting period, 14 strategic projects targeting five (5) water service authority customers were at various stages of planning, design and construction. 

These comprised eight (8) bulk water supply scheme projects, four (4) pipeline projects and two (2) wastewater treatment works projects.

Spend performance for the year of just over R840 million was achieved of which R549 million (R1.2 billion in 2019) was spent on infrastructure expansion, augmentation, upgrades and rehabilitation. Of this R184 million (22%) was spent on projects specifically extending access to rural areas. Overall, 55% of target water infrastructure project milestones were met for these strategic projects. Details of target customers, infrastructure projects and milestones during the reporting period are as follows:

1 uMshwathi Regional Bulk Water Supply Scheme: Serves iLembe District Municipality and uMgungundlovu District Municipality 

2 Greater Mpofana Bulk Water Supply Scheme: Serves uMgungundlovu District Municipality.

3 Vulindlela Bulk Water Supply Scheme  Upgrade: Serves Msunduzi Local Municipality

4 Impendle Bulk Water Supply Scheme: Serves uMgungundlovu District Municipality and Imphendle Local Municipality.

5 Maphumulo Bulk Water Supply Scheme Phase 3: Serves iLembe District Municipality, which includes KwaMaphumulo, Ndwedwe, and KwaDukuza Local Municipalities. 

6 uMkhomazi Water Project: Serves eThekwini Metropolitan Municipality, uMgungundlovu District Municipality, Msunduzi Local Municipality, Ugu District Municipality and iLembe District Municipality.

7 Lower uMkhomazi Bulk Water Supply Scheme: Serves eThekwini Metropolitan Municipality and Ugu District Municipality and will augment the coastal areas from Amanzimtoti to Hibberdene via the South Coast Pipeline. 

8 Nungwane Pipeline: Serves eThekwini Metropolitan Municipality and Ugu District Municipality. 

9 South Coast Pipeline Phase 2B: Serves Ugu District Municipality, including Pennington, Kelso, Malangeni and Shayamoya. 

10 Mhlabatshane Bulk Water Supply Scheme Phase 2 – Mzimkhulu River Abstraction: Serves Ugu District Municipality.

11 Midmar Raw Water Pipeline  Augmentation, Raw Water Pump Station and WTW Upgrade: Serves eThekwini Metropolitan Municipality, uMgungundlovu District Municipality and Msunduzi Local Municipality.

12 Darvill WWTW Capacity Increase: Serves Msunduzi Local Municipality.

13 Trustfeeds WWTW: Serves uMgungundlovu District Municipality and iLembe District Municipality.

14 Mpophomeni WWTW: Serves uMgungundlovu District Municipality and uMngeni Local Municipality.

 

Water Resources Adequacy

Umgeni Water requires access to stable raw water resources to meet future customer needs and continues to investigate regional integrated water resources plan to match growth and development forecasts. In this regard, collaboration with the Department of Water and Sanitation remains essential to ensure there is intersection of national and regional water resource development priorities.

In the reporting period, progress was made with the following water resource dam developments:

> Smithfield Dam (DWS) as part of the uMkhomazi Water Project for which the feasibility study was completed and construction anticipated to be completed by 2030;

> Hazelmere Dam raising (DWS) for which construction is in progress and expected to be completed in 2021; and

> Ngwadini Dam (UW), as part of the Lower uMkhomazi Scheme, for which the detailed design completed, construction is planned to start in 2021. 

Leadership and Employee Development

Umgeni Water’s goal is to strengthen and develop quality human resources and ensure a participatory, collaborative organisation dedicated to continual learning and improvement.

In the reporting year, 25 delegates from skilled technical to middle management occupational categories completed the custom-designed Management Development Programme (MDP) through the University of KwaZulu Natal (UKZN). This six (6) month programme equipped them with leadership skills, which will prepare them with the necessary competencies required in positions of higher responsibility. These skills are already being put into good use in various plaftorms within the entity enabling young professionals to actively participate in developing solutions for the entity and the sector. The entity remains steadfast in building future leadership, management and functional competence that is needed to ensure the long-term sustainability of the entity. 

Technical competencies are an important source of entity’s competitive advantage and during the reporting year, these were further developed, enhanced and retained through a wide range of training and development programmes.

The Umgeni Water Learnerships and Apprenticeships programmes provided 58 apprentices with training, development and exposure in Mechanical Engineering, Electrical Engineering and Instrumentation. The entity is delighted to report that all 58 apprentices in the aforementioned trades successfully completed their trade tests and qualified Artisans in record time. These newly qualified Artisans have been afforded more work-based training within the entity for a period of two years.

Umgeni Water’s graduate trainee programme, aligned to guidelines provided by professional registration bodies, ensured development of

31 graduates in engineering, science and other required professional fields, as well as provided 37 in-service trainees with experiential training. 

During this year, Umgeni Water funded 10 bursary students who were enrolled at various universities in disciplines of civil, mechanical and electrical engineering, chemistry, microbiology and finance.

Umgeni Water is committed to skills development that will benefit municipalities and the water sector as a whole. In this regard, partnership with National Treasury’s graduate development programme for engineers, technologists, process support and technicians continued, with 39 graduates in the programme during the year. These graduates are expected to be professionally registered by 2024.

The membership of the Umgeni Water Young Professionals (UWYP) forum, established in 2014 totalled 180 at the end of this reported period. The forum continues to aim at being a catalyst in supporting the organisation to achieve its vision and mission, be the proponent of continuous learning, growth and collaboration, and being a key partner to enable the organisation to achieve efficiency gains through innovation and use of best-fit technology.

Operational Resiliency

The entity’s risks are well aligned to strategy and there are a total of five (5) strategic risks, of which four (4) risks (80%) have been managed to a level equal to or above reasonable (> 55%) response effectiveness.

Umgeni Water continues to maintain the quality of its laboratories at a level that ensures they provide a world-class service 365 days a year. These facilities are ISO/IEC 17025 accredited in chemistry, microbiology, hydrobiology and soil testing and have highly skilled and dedicated technical staff.

Operational Optimisation

Water efficiencies have been ensured in the bulk business through careful water balancing per system. In the reporting period water loss was maintained well below the entity’s target level of 5%, with a total of 2.91% recorded for the year (2.25% in 2019). 

Energy is a crucial resource for water and wastewater treatment processes. Optimal pumping and other strategies remain inherent parts of the business mind-set from planning, design and construction through to operation.

Various initiatives to optimise the use of water treatment chemicals were implemented in the year.

The total waste produced during the reporting period was 892 kg per mil m3 and 0.20% of this waste was recycled.

Financial Viability

The entity has maintained its reputation as a financially viable entity, creating significant value for customers and shareholders. Strong results were achieved due to sound financial management in the year, notably:

> Revenue (Group) of R4.2 billion was generated (R3.5 billion in 2019), 

> Net surplus (Group) was R1.3 billion(R1.4 billion in 2019), and

> Balance sheet reserves were strengthened to R10.7 billion (R9.1 billion in 2019).

The earned surplus for the year will be invested in support of the future five-year R16.7 billion (not escalated) capital investment programme,

as well as used for debt reduction. As at 30 June 2020, a significant portion of capital investments were already committed.

The strength of the balance sheet and access to other strategic financial resources remain vital to Umgeni Water for expanding services to new areas and implementing the strategy of Enabled and Innovative Growth.