The Department of Human Settlements, Water and Sanitation is central to the economic development and social well-being of the country as its mandate is to provide sufficient, reliable, clean water 365 days a year to support socio-economic growth and to this end the water boards play a vital role in the supply of water and water resource management.
The merging of the Department of Human Settlements and the Department of Water and Sanitation under one ministry gives us an opportunity to practically coordinate the work of the two departments. This marks an expansion and alignment on the focus areas and makes me optimistic that we will be able to improve water services delivery for the citizenry of the country.
Performance results contained in this Annual Report are deliverables identified in the organisation’s Five-Year Corporate Plan and in the Shareholder Compact signed with the Minister of Human Settlements, Water and Sanitation.
Another momentous year has come to a close for Umgeni Water and, indeed, the South African water sector. I am honoured to present the Chairperson’s Report for Financial Year 2018/2019. A period that was marked by many accomplishments and some challenges, as our organisation gave impetus to implementation of expansion strategies.
This report contains key performance results from the financial year 2018/2019 (July to June)
that have been significant contributors to Enabled and Innovative Growth, a theme adopted by Umgeni Water to guide its expansion programme. Enabled and Innovative Growth emphasises that Umgeni Water’s growth initiatives will be implemented in a managed and measured manner, thereby reducing or eliminating risk generally associated with new business.
The carefully crafted strategy to identify and pursue expansion potential has already yielded some positive results, namely:
- uThukela District Municipality became the seventh customer of Umgeni Water following signing of a partnership agreement in Ladysmith in November 2017. The partnership agreement makes provision for Umgeni Water to ultimately operate and manage fourteen (14) schemes on behalf of this district municipality and for municipal staff at these schemes to be transferred to Umgeni Water;
- Discussions are also taking place with King Cetshwayo District Municipality (KCDM) for Umgeni Water to become the Water Services Provider for parts of the district that share water resources with current Umgeni Water supply areas; and
- Negotiations have been concluded with two existing customers, Harry Gwala District Municipality and Ugu District Municipality, for Umgeni Water to operate and maintain some secondary bulk potable water schemes or implement augmentation interventions within these districts.
In the medium-term, Umgeni Water will continue efforts to expand coverage in KwaZulu-Natal through the provision of services and products to municipalities that are facing service delivery challenges, or when requested by the KwaZulu-Natal Provincial Government and/or the Ministry of Human Settlements, Water and Sanitation to act as implementing agent.
Internally at Umgeni Water there have also been some significant changes that have had the effect of strengthening governance. Key among these developments was the appointment of a permanent Board, whose term of office began on 1st May 2019. As in the past, the Board will continue to provide leadership in the development of strategy, while at the same time, drive business growth and initiatives to improve the lives of the people through increased access to water. A warm welcome is therefore, extended to new members of the Board, who bring with them diverse and sought-after skills that will be invaluable to Umgeni Water and a boon to the water sector.
In the year under review, the executive committee also saw a significant transformation, with the appointment of four (4) new executives. Ms Nomalungelo Mkhize, Appointed as Executive Finance in December 2018. Ms Manu Pillay, Appointed as Executive Scientific Services in December 2018. Dr Sipho Manana, Appointed as Executive Corporate Services in June 2019. Mr Sbusiso Mjwara, Appointed as Executive Infrastructure Development in November 2018.
Umgeni Water again illustrated its strong financial resiliency. In the reporting year Group revenue totalled R2.90 billion and a net surplus of R1.41 billion was achieved, partly as a result of cost containment measures through optimisation of water production process and recovery from the drought in the prior year.
The earned surplus for the year will be invested in support of the future five-year R10.8 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.
A combination of solid enterprise-wide systems, backed by highly competent employees and robust leadership provided by the Executive Team and Board ensured that Umgeni Water’s performance was maintained at a high level during this reporting period.
The outlook is positive. The position of strength that has been carefully maintained within the entity provides a stable base that can be leveraged by Umgeni Water to implement its strategy of Enabled and Innovative Growth. In so doing, Umgeni Water will serve its customers and the people of KwaZulu-Natal in a more effective manner, while braving the challenges and taking the opportunities presented by a changing future and almost certain changing world of work.