Progress against strategic objectives was significantly achieved during this reporting period as measured against the entity’s ten (10) outcomes for sustainable value creation.
Umgeni Water’s core business of providing potable water to customers and providing water supplies fit for drinking and domestic use, as well as for industry, performed excellently during this period. Of the seventeen (17) water treatment works (WTW), barring one (1) small site, all achieved 100% compliance with the SANS 241 standard. The one works, Mhlabatshane WTW, achieved less than 100%, solely due to a slight variance with the operational category for which it achieved 97% compliance.
The entity further ensured that wastewater was treated to safe levels for discharge back into water resources for social, environmental and other downstream uses. Of the nine (9) wastewater treatment works (WWTW) managed by the entity, six (6) achieved greater than 90% compliance, one (1) achieved more than 80% compliance and two (2) works achieved over 70% compliance.
In order to maintain and enhance the condition of core infrastructure that supports customer service levels, the entity invested a total of R213m (R190m in 2017) in maintenance of water and wastewater treatment assets during this period. Maintenance investment has been consistent over the years, with greater than 7% of revenue and 2.5% of Property, Plant and Equipment spent, thereby continuing to assure system reliability.
This financial year under review coincided with an improvement in sales growth, albeit from a low base associated with prior year’s drought. Bulk potable water treated and supplied from seventeen (17) water treatment works systems, totalled 435 million cubic metres (1 192 Ml/d) for the year, a 6% increase from the prior year (410 million cubic metres in 2017).
Bulk wastewater treated over this period was 32 million cubic metres per annum (87 Ml/d), which are at levels similar to the prior year.
The entity is delighted to report that during this period, there were zero unplanned service disruptions to customers that exceeded the targeted ≤ 24 hours.
This was achieved by managing operations and assets well to quickly restore unplanned supply disruptions, through planning adequate supply capacity and by ensuring flexibility and availability of alternate supply options to maintain continuous supply to customers.
Stakeholder Understanding and Support
There was regular engagement with a wide range of stakeholders in the year. In particular, information on performance post the drought and water curtailment period, including dam levels, water volumes, water quality, supply pressure and service interruption intervals was provided. 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.
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 39% (R174m of R451m) orders made to black-owned enterprises, of which 55% benefited women-owned enterprises.
A total of 599 temporary Capex Programme jobs were created in the year (1 258 in 2017) with R20 million paid in wages to local labour (R28 million in 2017). The decrease from the prior year is due to a decrease in the past year’s capital expenditure programme.
During this reporting period, fifteen (15) 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, three (3) pipeline projects, three (3) wastewater treatment works projects and one (1) water treatment works project.
Spend performance for the year of just over R982 million was achieved, of which R926 million (R1.2 billion in 2017) was spent on infrastructure expansion, augmentation, upgrades and rehabilitation. Of this, R367 million (40%) was spent on projects specifically extending access to rural areas. Overall, 72% 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 Wartburg to Bruynshill Pipeline and Pump Station: Serves uMgungundlovu District Municipality.
- 3 Greater Mpofana Bulk Water Supply Scheme: Serves uMgungundlovu District Municipality.
- 4 Vulindlela Bulk Water Supply Scheme Upgrade: Serves Msunduzi Local Municipality.
- 5 Impendle Bulk Water Supply Scheme: Serves uMgungundlovu District Municipality.
- 6 Maphumulo Bulk Water Supply Scheme Phase 3: Serves iLembe District Municipality, which includes KwaMaphumulo, Ndwedwe and KwaDukuza Local Municipalities.
- 7 uMkhomazi Water Project: Serves eThekwini Metropolitan Municipality, uMgungundlovu District Municipality, Msunduzi Local Municipality, Ugu District Municipality and iLembe District Municipality.
- 8 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.
- 9 Nungwane Pipeline: Serves eThekwini Metropolitan Municipality and Ugu District Municipality.
- 10 South Coast Pipeline Phase 2B: Serves Ugu District Municipality, including Pennington, Kelso, Malangeni and Shayamoya.
- 11 Mhlabatshane Bulk Water Supply Scheme Phase 2 – Mzimkhulu River Abstraction: Serves Ugu District Municipality.
- 12 Midmar Raw Water Pipeline Augmentation, Raw Water Pump Station and WTW Upgrade: Serves eThekwini Metropolitan Municipality, uMgungundlovu District Municipality and Msunduzi Local Municipality.
- 13 Darvill WWTW Capacity Increase: Serves Msunduzi Local Municipality.
- 14 Trustfeeds WWTW: Serves uMgungundlovu District Municipality and iLembe District Municipality.
- 15 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 plans 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 2019; and
- Ngwadini Dam (UW), as part of the Lower uMkhomazi Scheme, for which the detailed design commenced in 2017/2018, is planned for completion in 2018/2019 and construction to start thereafter.
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, partnership with Duke Corporate Education was secured for coordination and implementation of a Management Development Programme (MDP) for thirty (30) Umgeni Water Young Professionals.
The programme commenced in 2017/2018 and will be completed in 2018/2019. The programme will contribute to the building of future leadership, management and functional competence that is needed to ensure the long-term sustainability of the entity.
The Umgeni Water Learnerships and Apprenticeships programmes provided fifty-eight (58) apprentices with training, development and exposure, in Mechanical Engineering, Electrical Engineering and Instrumentation.
Umgeni Water’s graduate trainee programme, aligned to guidelines provided by professional registration bodies, ensured development of a total of twenty-four (24) graduates in engineering, science and other required professional fields, as well as provided sixty-two (62) in-service trainees with experiential training.
In the reporting year, Umgeni Water funded ten (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 thirty (30) graduates in the programme during the year. By year end, a total of eighteen (18) Certification Submissions for Candidate Engineers were made, while four (4) Candidates (from the prior year’s programme) were successfully registered as Professional Engineers.
The membership of the Umgeni Water Young Professionals (UWYP) forum, established in 2014 totalled 163 at the end of this reporting period. This forum has also created an enabling environment for professional growth of youth through affiliation and registration with professional bodies.
The entity’s risks are well aligned to strategy and there are a total of seven (7) strategic risks, of which, six (6) risks (86%) 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.
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 2.17% recorded for the year (2.29% in 2017).
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.
Electricity usage contributes to 99% of the entity’s carbon footprint.
Various initiatives to optimise the use of water treatment chemicals were implemented in the year.
The total waste produced during the reporting period was 1 745 kg per million m3 of treated bulk potable water, of which 2.23% was recycled.
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 R2.90 billion was generated (R2.51 billion in 2017); • Net surplus (Group) was R1.19 billion (R746 million in 2017); and • Balance sheet reserves were strengthened to R8.1 billion (R6.8 billion in 2017). The earned surplus for the year will be invested in support of the future five-year R9.8 billion (not escalated) capital investment programme, as well as used for debt reduction.
As at 30 June 2018, 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.