Progress against strategic objectives was significantly achieved during this reporting period as measured against the entity’s ten (10) outcomes for sustainable value creation.
All seventeen (17) works met the Excellent SANS214 standard in all five (5) compliance categories. The three (3) water treatment works acquired from uThukela District Municipality are being progressively brought up to the Umgeni Water operational standards, with various process interventions in progress to improve water quality within the next year.
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 R225 million (R213m in 2018) in maintenance of water and wastewater treatment assets during this period. Maintenance investment has been consistent over the past five 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 472 million cubic metres (1294 Ml/d) for the year, a 9% increase from the prior year (435 million cubic metres in 2018).
Bulk wastewater treated over this period was 29 million cubic metres per annum (80 Ml/d), which are at levels similar to prior year.
In the year there was one (1) unplanned supply disruption of three and a half (3.5) supply days in one (1) of the seventeen (17) supply systems. This event, which occurred in the first quarter, was due to power supply upgrade at Maphumulo Raw Water Pump station taking longer than the planned twelve (12) hours. Supply was successfully restored after the completion of the pump station upgrade.
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% (R180m of R513m) orders made to black-owned enterprises, of which 87% (R162m of R180m) benefited women owned enterprises.
A total of 484 temporary Capex Programme jobs were created in the year (585 in 2018) with R19 million paid in wages to local labour (R20 million in 2018). The slight decrease from the prior year is due to project delays and the construction sector going through a period of great upheaval as more construction companies file for business rescue.
During this reporting period, fourteen (14) strategic projects targeting six (6) 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 R1.25 billion was achieved of which R1.1 billion (R927 million in 2018) was spent on infrastructure expansion, augmentation, upgrades and rehabilitation. Of this R383 million (35%) was spent on projects specifically extending access to rural areas. Overall, 66% 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.
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 2020; 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 2019/2020 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, thirty (30) Water Young Professionals completed the custom-designed Management Development Programme (MDP) through Duke Corporate Education. 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 the 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 fifty-eight (58) apprentices with training, development and exposure in Mechanical Engineering, Electrical Engineering and Instrumentation. The entity is delighted to report that all fifty-eight (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 twenty (20) graduates in engineering, science and other required professional fields, as well as provided forty-five (45) in-service trainees with experiential training.
During this year, Umgeni Water funded thirteen (13) 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-nine (39) graduates in the programme during the year. By year-end, a total of thirty-nine (39) certification submissions for candidate engineers were made.
The membership of the Umgeni Water Young Professionals (UWYP) forum, established in 2014 totalled 187 at the end of this reported period. This forum has also created an enabling environment for professional growth of youth through affiliation and registration with professional bodies. In this reporting period, 39% (72 of 187) Young Professionals were registered as either Professionals or Candidates in their respective vocational fields.
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 2.25% recorded for the year (2.17% in 2018).
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.
The total waste produced during the reporting period was 1281 kg per mil m3. 4.13% of this waste 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 R3.54 billion was generated (R2.90 billion in 2018),
- Net surplus (Group) was R1.41 billion (R1.17 million in 2018), and
- Balance sheet reserves were strengthened to R9.52 billion (R8.06 billion in 2018).
The earned surplus for the year will be invested in support of the future five-year R8.91 billion (not escalated) capital investment programme, as well as used for debt reduction. As at 30 June 2019, 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.