Media Statement Key Performance Outcomes: 2018/19 - Umgeni Water
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Media Statement Key Performance Outcomes: 2018/19
Annual Performance 2018/19
ABOUT UMGENI WATER
Umgeni Water is a business enterprise that is wholly owned by the Government of the Republic of South
Africa. It was established in 1974 to provide water services (bulk potable water and large-volume
wastewater treatment) to the municipalities of Durban and Pietermaritzburg. Consumers in the corridor of
these cities also received potable water that was treated and supplied by Umgeni Water. In its 45 years of
existence the entity has grown to become the largest bulk potable water provision organisation in the
Province of KwaZulu-Natal and the second-largest water utility in South Africa. Expansion and new business
development initiatives implemented by the organisation could result in increased coverage in KwaZulu-
Natal. In this regard, negotiations are being conducted by Umgeni Water to operate and manage (O&M)
additional secondary bulk potable water schemes on behalf of Ugu, Harry Gwala, uThukela and King
Cetshwayo District Municipalities.
CONDUCTING OPERATIONS
As at 30th June 2019, Umgeni Water, the group, had a
total of 1 250 employees at its various sites. They were
in permanent, fixed-term, trainee and casual
employment. The majority of them are involved in all of
the functional areas of Umgeni Water: finance, asset
management, planning of projects, project
management, water quality, water resource
management, environmental science and management
and water treatment and conveyance. The supply area
of Umgeni Water is the entire Province of KwaZulu-
Natal, as declared in gazette issued by the Ministry of
Water and Sanitation in 2015. The supply area
comprises 94 359 square kilometres, and there are 54
municipalities in KwaZulu-Natal. A total of 43 of them
are Local Municipalities, 10 are District Municipalities
and one is a Metro. In terms of the Water Services Act,
14 of these municipalities are Water Services
Authorities (WSAs). Of these WSAs, seven are
customers of Umgeni Water. They are eThekwini
Metro, Msunduzi Local Municipality, iLembe District
Municipality, Ugu District Municipality, Harry Gwala
District Municipality, uMgungundlovu District Umgeni Water’s supply focus areas
Municipality and uThukela District Municipality.
Umgeni Water now covers 44% of KwaZulu-Natal, from its original 32%, and the water it treats and supplies
will ultimately reach 73% of the Province’s population of 11.1 million people, or 2.9 million households.
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Annual Performance 2018/19
SUPPORTING NATIONAL GOVERNMENT’S DEVELOPMENT MANDATE
The key activities of Umgeni Water, as defined in the Water Services Act (Section 29), are to provide water
services (bulk potable/drinking water and sanitation services) to WSAs. The mandate of Umgeni Water
designates to it the functions of a Water Services Provider. Section 30 of the Water Services Act allows
Umgeni Water to undertake other activities, provided that these do not impact negatively on its ability to
undertake its primary function. The organisation has the following infrastructure to support its business
activities (this infrastructure is either owned by Umgeni Water or managed on behalf of the Department of
Water and Sanitation and some municipalities):
Approximately 1 260 kilometres of pipelines
Approximately 53 kilometres of tunnels
Fifteen (15) impoundments, six of which are managed on behalf of the Department of Water and
Sanitation and two on behalf of Ugu District Municipality
Twelve (12) wastewater treatment works, and
Twenty (20) water treatment works
GOVERNANCE AND COMPLIANCE
As at 30th June 2019, Umgeni Water had a full Board comprising 13 non-Executive members and one
Executive member, the Chief Executive. The Board’s term of office began on 1st May 2019 following
confirmation of appointments by the Executive Authority. The Board has full responsibility and powers of
the Accounting Authority. Prior to the appointment of the current Board, the previous Board had been
appointed to serve an interim period, from September 2017 to April 2019.
MEMBERS OF THE BOARD OF UMGENI WATER (INCLUDING CE): TERM BEGAN ON 1st MAY 2019
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Annual Performance 2018/19
The roles of the Chairperson and the Chief Executive are separate, as recommended in King IV Report, to
ensure independence and clear separation of roles and responsibilities. In terms of the Water Services Act,
Board members, excluding the Chief Executive, are appointed by the Minister of Water and Sanitation (now
Minister of Human Settlements, Water and Sanitation), and the Board contracts with the Minister through a
Shareholder Compact. The Board has four Committees to assist it in discharging its responsibilities. These
Committees are: Audit; Capital Projects, Fixed Assets and Procurement (CAPEX); Remuneration and Human
Resources (REMCO); and Governance. The Committees enable effective decision making through provision
of detailed attention to matters within their respective terms of reference.
Adherence to good corporate governance is underpinned by an Ethics Committee, which has an
independent Chairperson (a Chartered Accountant with extensive public and private sector experience). The
Board’s responsibilities include development, review and monitoring of strategic objectives, approval of
major capital expenditure, risk management and monitoring of operational and financial performance. The
Board is accountable for leadership and control.
One of the key focus areas unanimously adopted by the new Board for detailed attention during its term of
office is fruitless, wasteful and irregular expenditure. The Board is determined that there will be
uncompromising adherence to the Public Finance Management Act (PFMA) No 1 of 1999, National Treasury
Instructions and internal policies and procedures in order to ensure that management continue to
administer Umgeni Water’s finances in line with legislative imperatives and expectations, and in line with
South African and global accounting best practices.
The Board has made it clear that incidences of irregular expenditure will be evaluated thoroughly, in
conformance with the PFMA, in order to understand the facts and circumstances that led to irregular
expenditure and appropriate consequence management steps will be implemented, which may even
include cost recovery and referral to law enforcement authorities if wrong doing is suspected. Deliberate or
intended acts of wasteful and fruitless expenditure will also be dealt with decisively and appropriate action
taken to offset or minimise financial loss to Umgeni Water.
Further, the Board has taken a decision to spearhead Comparative Assessment programme on Umgeni
Water’s governance systems with a view to improving where needs exists, as well as align with best practice.
This work will be carried out by an independent team of experts who will be appointed to the panel that will
advise the Board on a variety of key areas of the business. This will ensure that Umgeni Water benchmarks
itself against the best/world-class institutions and adapts to challenges faced by public sector organisations,
improves its processes and align to all applicable legislative and regulatory requirements.
Various stakeholders, including customers, regulatory institutions, National Treasury, the Auditor-General,
the Shareholder, sector players and other State-Owned institutions will be engaged during this process.
More public pronouncements on this will be made in due course.
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Annual Performance 2018/19
Day-to-day management of the organisation is the responsibility of the Chief Executive, who works with five
Executives to assist him. The Chief Executive, the Executives and the Company Secretary serve in an
Executive Committee, whose key functions are implementation of the Board’s strategy and policy direction,
and ensuring that all business activities are aligned to strategies and policies.
MEMBERS OF THE EXECUTIVE COMMITTEE OF UMGENI WATER
STRENGTHENING OPERATIONS
In the year under review internal structural changes were made at an Executive level that resulted in the
Engineering and Scientific Services Division being split into two divisions. These new divisions are
Infrastructure Development and Scientific Services, each with its own Executive. The creation of an
Infrastructure Division allows the organisation to concentrate with added vigour on infrastructure
implementation which will include two new projects, the Lower uMkhomazi Bulk Water Supply Scheme and
the uMkhomazi Water Project. The total estimated cost of both projects is expected to amount to R30
billion. A separate Scientific Services Division allows the organisation to provide additional energy to
executing and supporting scientific and environmental work, including catchment management and an array
of other disciplines, among them process services and research and development. Greater concentration
on catchment management will ultimately result in improved raw water quality and quantity reaching
Umgeni Water’s impoundments.
Four new Executives joined the Executive Management team during the financial year under review:
Mr Sibusiso Mjwara: Infrastructure Development
Mrs Manu Pillay: Scientific Services (formerly Strategy Manager at Umgeni Water)
Mrs Nomalungelo Mkhize: Finance (Chief Financial Officer)
Dr Sipho James Manana: Corporate Services
The appointment of new Executives has ensured business continuity, strengthening of governance and
uninterrupted and effective management of customer and stakeholder relations.
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Annual Performance 2018/19
STAKEHOLDER UNDERSTANDING AND SUPPORT
During the reporting period, as in the past, Umgeni Water received full co-operation from its stakeholders,
illustrating again that the organisation’s objective of achieving stakeholder understanding and support has
indeed been fulfilled. The Board and Executive Committee wish to acknowledge the following stakeholders:
The Minister of Human Settlements, Water and Sanitation, Ms Lindiwe Sisulu, for her leadership
The Deputy Minister of Human Settlements, Water and Sanitation, Mr David Mahlobo, for his
leadership
The Deputy Minister of Human Settlements, Water and Sanitation, Ms Pamela Tshwete, for her
leadership
The former Minister of Water and Sanitation, Mr Gugile Nkwinti, for his leadership
The Premier of KwaZulu-Natal, Mr Sihle Zikalala, and MECs of the Provincial Government for their
constructive and valuable engagement with Umgeni Water
The Portfolio Committee responsible for Water and Sanitation for oversight and direction
The Department of Water and Sanitation for support, oversight and direction
Umgeni Water’s seven customers: eThekwini Metropolitan Municipality; iLembe, Ugu, Harry Gwala,
uMgungundlovu and uThukela District Municipalities and Msunduzi Local Municipality for their
support and collaborative engagements
Members of the previous Board of Umgeni Water for their strategic and constructive contribution
to Board business
Umgeni Water Management and employees for the manner in which the organisation’s strategies
were executed in the year and for their dedication and hard work in realising these results
STRATEGIC FOCUS: ENABLED AND INNOVATIVE GROWTH
At the time of preparation of this Annual Report the process for appointment of a permanent Board had
been completed, and members’ tenure began on 1st May 2019 after a rigorous process of short-listing and
interviews and finally selection by the Minister of Water and Sanitation.
Stewardship of the organisation is the responsibility of the Chief Executive, and a strong Executive team that
will continue to ensure the organisation remains both stable and sustainable. In the year ahead excellence in
delivery of products, services and operation and management of schemes will be maintained, along with an
affordable bulk potable water tariff. These are key ingredients for accelerated socio-economic development
and vital contributors to reduction of the triple challenges of unemployment, poverty and inequality.
In line with Umgeni Water’s continued strategic focus on Enabled and Innovative Growth, efforts will be
intensified to expand coverage in KwaZulu-Natal through provision of services and products to
municipalities in a collaborative effort to triumph over service delivery challenges, and/or when requested
by the Provincial Government or the Department of Water and Sanitation to intervene as implementing
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Annual Performance 2018/19
agent. Retention, growth and further penetration of current markets; and development, on demand, of new
markets will also be actively pursued as part of growth strategies.
During the financial year under review strategies implemented to identify growth prospects had already
begun yielding some promising results:
On 17th October 2018 uThukela District Municipality became the seventh customer of Umgeni Water
following signing of a partnership agreement in Ladysmith. The partnership agreement makes
provision for Umgeni Water to ultimately operate and manage 14 schemes on behalf of this district
municipality and for municipal staff at these schemes to be transferred to Umgeni Water. Umgeni
Water is currently operating three schemes and the rest will be phased in.
Negotiations are at an advanced stage with two existing customers, Harry Gwala District Municipality
and Ugu District Municipality, with a view to Umgeni Water operating and managing some
secondary bulk schemes or implementing augmentation interventions within these districts. The
schemes under negotiation for O&M are in Kokstad, within Harry Gwala DM, while a system is
required to transfer water from Weza River to Harding Dam, both in the South Coast System within
Ugu DM. Successful implementation and O&M of the Harding/Weza scheme could result in Umgeni
Water also operating and managing the Boboyi, Umtamvuna and Umzimkhulu River systems.
In support of Enabled and Innovative Growth, Research and Innovation task teams comprising leaders,
senior managers and young professionals have been formed. These task teams will assist the organisation in
identifying opportunities arising from the Fourth Industrial Revolution (4IR) and translate them into value
for the organisation.
One of the key strategic investments will be in skills development in order to prepare employees for future
needs in the workplace, aligned to technological and other changes that will accompany 4IR.
Key focus areas of these task teams will be:
Obtaining a complete and current picture of water supply and demand
21st century water infrastructure systems and management
Providing increased access to good quality water and sanitation services
Managing growing demand
Diversified sources of supply
Ensuring water quality
Building resilience to climate change
Leveraging real-time water data to empower users (decision-makers, end-users, communities)
Cyber security and mitigation of other technology risks (including the future of work)
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Annual Performance 2018/19
CONTENTS OF THIS ANNUAL REPORT
Umgeni Water’s Annual Report 2018/19 reflects progress that has been made in meeting the objectives and
performance indicators in the organisation’s Corporate Business Plan and Shareholder Compact.
Information pertaining to audited financial statements and performance in core and other aspects of the
organisation’s business are also contained in this report.
MESSAGE FROM THE CHIEF EXECUTIVE
This Media Statement has been compiled to serve as reference for journalists
who are working to tight deadlines and, therefore, have to file their reports
expeditiously. Detailed narrative on performance, together with financial
statements, is contained in the Annual Report and in presentations.
Employees of Umgeni Water are delighted with their organisation’s
performance and enthusiastic about the future as the organisation rolls out
plans that include positioning it as the Water Utility of First Choice and an
Enabler of Development in KwaZulu-Natal. Positive outcomes contained in
this Media Statement, in presentations and in the Annual Report were
achieved in the midst of challenges including a sluggish economy, resulting in
reduced end-customers’ ability to pay for services. Other challenges that
impacted on the domestic economy were international developments, such
as tensions between the United States and China and between the United States and Iran.
Infrastructure being constructed for Umgeni Water also encountered some serious hurdles due to
challenges with contractors on these projects. The projects in question are the upgrade of Darvill
Wastewater Treatment Works (WWTW) and the Mpofana Bulk Water Supply Scheme (BWSS). In respect of
the Darvill WWTW project, the main contractor filed for business rescue. In order to ensure work continuity,
Umgeni Water applied for consent from National Treasury to negotiate with sub-contractors on the project
to complete the remaining work. Consent has been granted and work will resume. Quality evaluation of
work undertaken by the sub-contractors will be done by the Engineering team on site.
One of the two contractors on the Mpofana BWSS project also filed for business rescue. This contractor had
been constructing the water treatment works in Rosetta. Through request to this company, the sub-
contractors have been allowed to be engaged by Umgeni Water directly through cessation of contracts so
that work can be completed. Construction of the pipeline component of the Mpofana BWSS has come to a
standstill after the contractor terminated work due to a contractual dispute.
It is unfortunate that this situation has occurred because, in the case of Mpofana BWSS, delays in
commissioning the project and making available a sustainable supply of safe drinking water to parts of the
Midlands and Mooi River have become unavoidable. In the case of Darvill WWTW, delays in completion will
mean that this plant will continue to operate in excess of capacity, resulting in environmental impacts.
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Annual Performance 2018/19
Against this backdrop there has also been some positive developments relating to implementation of an
intervention/emergency scheme that will ease water shortages in Harding, within Ugu. Umgeni Water has
been requested by Ugu DM to implement a pipeline that will transfer water from Weza River into Harding
Dam. The water will be treated at the Harding Water Treatment Works and supplied to the town of Harding
and surrounding areas. Umgeni Water will operate and manage the system in Harding, signaling an increase
in the organisation’s footprint.
Despite the challenges already mentioned, Umgeni Water again delivered a set of solid results that reflects
its undisputed position as a sustainable organisation that adds value to its customers and the people of
KwaZulu-Natal. The organisation has maintained a strong financial position that allows it to have unhindered
access to pre-determined borrowing limits – factors that enable provision of bulk potable water
infrastructure and formulation of an affordable bulk potable water tariff.
Importantly, the results of 2018/2019 reflect Umgeni Water’s resiliency and strategic position to further
support the Department of Water and Sanitation’s National Water and Sanitation Master Plan that
prioritises actions and investments to ensure a future that supports inclusive development and universal
sanitation coverage. These results were made possible through commitment of the Board, including the
present Board, Management and Staff and the vast array of Umgeni Water’s stakeholders.
KEY PERFORMANCE HIGHLIGHTS
The following are some organisational achievements in
the financial year under review:
Intensive negotiations ended successfully in the
signing of a 20-year partnership agreement that
opened the way for Umgeni Water to operate and
manage secondary bulk potable water schemes on
behalf of uThukela District Municipality. At this
stage Umgeni Water is operating and managing
three schemes, and will ultimately take under its
management another 11 schemes. The partnership Signing of partnership agreement in Ladysmith
involves Umgeni Water becoming the Water Services Provider to the DM. In the next five years
investments will be made in rehabilitation, upgrades and refurbishment of infrastructure. A regional
office has been opened in Ladysmith to serve as a base for Umgeni Water
Good progress continues to be made with implementation of the Lower uMkhomazi Bulk Water
Supply Scheme. When completed, it will provide for the water needs of an estimated 500 000 people
in the coastal belt from Amanzimtoti in eThekwini to Hibberdene in Ugu. A memorandum of
agreement has been signed with the KwaQiko Traditional Authority that allows Umgeni Water to
construct the off-channel Ngwadini Dam on land belonging to the Traditional Authority. The
Ngwadini Dam, a component of the Lower uMkhomazi Bulk Water Supply Scheme, will be situated in
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Annual Performance 2018/19
the Lower uMkhomazi River catchment. The budgeted project cost of R4 billion represents a
significant investment in infrastructure that will secure future water supply, reduce backlogs and
assist in regenerating industrial and economic development. If all goes according to schedule,
construction will begin in 2020
One of the biggest investments in bulk water infrastructure in South Africa will be made in the Upper
uMkhomazi Water Project that will be constructed to feed eThekwini Metro’s Western Aqueduct. In
a significant endorsement of the project and its strategic importance, Umgeni Water and the Trans-
Caledon Tunnel Authority (TCTA) received approval from the Minister of Water and Sanitation to go
ahead with it. This was in the form of a Ministerial directive which also defines the roles and
responsibilities of Umgeni Water, TCTA and the Department of Water and Sanitation. Umgeni Water,
TCTA and the Department of Water and Sanitation officials are already working closely to define
each entity’s role in institutional, financial and project co-ordination arrangements and to also
facilitate implementation of the project. Their joint efforts will ensure that preparations for
implementation, which at this stage are largely in the environmental sphere, are executed timeously.
Progress to date has included agreement on development of two project charters, one by TCTA and
the other by Umgeni Water. Umgeni Water will implement the potable water component while TCTA
will be responsible for the raw water component of the scheme
Construction and commissioning of the uMshwathi Regional Bulk Potable Water Supply Scheme
have been completed. This scheme will benefit communities in uMgungundlovu and iLembe district
municipalities. It will increase assurance of supply and, for the first time, make a reliable supply of
potable water available in areas of Mshwathi, Southern Ndwedwe and Central Maphumulo. The
project cost to date has been R972 million
High-level engagements across the entire spectrum of stakeholders allowed Umgeni Water to share
organisational performance outcomes, provide details about its Infrastructure Development
Programme and water shortage mitigation measures available for implementation
Formation of synergies with water sector institutions in Africa and attendance of water sector-
related events in Africa, Europe and the United States
Challenges facing South Africa’s water sector were dissected at a high-level strategic dialogue that
was organised by Umgeni Water. Participants in this session included Overberg Water, based in the
Western Cape, the organised business community of Durban and municipalities. Possible solutions to
these challenges were also intensely debate. Key focus areas included projections on future water
demand, whether water quality compliance can be consistently met and consumers’ affordability of
water, especially in the context of a growing indigent population. Deliberations and outcomes on
these matters will be helpful to municipalities and water boards in future planning, including revenue
projections
In the majority of systems water quality continued to be classified as excellent against the
requirements of SANS 241:2015 for each risk category. As a consequence, public health was assured
while meeting customers’ water demands and water quality compliance
10Annual Performance 2018/19
Roll out of major infrastructure continued in order to increase assurance of supply and assist in
eliminating water backlogs within Umgeni Water’s operational area and beyond. To this end, an
amount of R1, 36 billion has been committed for 2019/2020 financial year. Of this amount and in
2019/2020, approximately R408 million will be spent on rural development projects
Umgeni Water continued to invest in training and
development which included intake of artisan
trainees who have been placed in various
disciplines of the business to receive on-the-job
training. In addition, young professionals received
training in management development in order to
prepare them as future leaders in the sector and in
the economy, in general.
(The picture on the right shows graduates with the CE and Managers)
FINANCIAL PERFORMANCE HIGHLIGHTS
SURPLUS/PROFIT
The organisation posted a surplus of R1, 4 billion. The surplus will be used, among others, to implement key
critical Infrastructure projects to ensure water resource security. These projects will assist municipalities
meet future demand and eliminate water backlogs. The emphasis on provision of such infrastructure is on
sustainability of supply of safe drinking water.
REVENUE
For the year under review revenue totalled R3, 524 billion, reflecting an increase of R636 million - or 22% -
from the prior year. Bulk water revenue grew by 23%. Bulk water sales volumes grew by 8, 6% % as the
drought subsided, while the approved bulk water tariff increase for 2018/2019 was 13, 7%.
OPERATING COSTS
1. Overall, cost of sales increased by 11%.
2. Chemical and energy costs increased by 10% and 13% respectively. Chemicals usage increase resulting
from the higher volumes of bulk water treated was the main contributing factor to the overall increase year
11Annual Performance 2018/19
on year. Energy cost increases were due mainly to additional pumping as compared to the prior year when
some of the major pumps underwent maintenance, as well as additional costs from new plants taken over
from uThukela DM, whilst the average price increase was 7.5%.
3. Raw water increased by 15% as a result of increase in abstraction volumes as more water was available in
the systems in the period under review.
4. The tariff increases for the systems of supply were 5% for Mngeni and 12% for Hazelmere.
5. Maintenance was 8% higher which mostly relates to internal maintenance.
6. Staff costs increased by 14% as a result of the 8% average salary increases combined with an increase in
the staff establishment in line with the revised organisational structure and expansion into uThukela District,
as well as higher provisions for Incentive bonuses in accordance with the performance management policy.
7. Other operating and administration expenses increased by 42%, from R726 million to R1, 033 billion,
mainly as a result of increased allowance for credit losses of R50 million due to late and non-payments by
customers; capital work in progress write-offs of R83 million; higher security costs and SAP maintenance
costs for the full year based on the contract which started in May 2018.
ASSETS
The total asset base increased by R1, 569 billion, primarily due to net increases in property, plant and
equipment amounting to R871 million and financial investments amounting to R374 million.
FUNDING PERSPECTIVE
Total interest-bearing borrowings, at R1, 793 billion, reflect a reduction of R79 million due to scheduled
repayment of amortising loans. The gearing ratio improved by 17% from 0.23 in 2018 to 0.19 in 2019,
primarily due to increase in accumulated profits by R1, 416 billion.
CASH FLOW
Strong operating cash flows at R1, 574 billion (2018: R1, 324 billion) continued to be generated. The
operating cash after scheduled repayment of debt was sufficient to fund investing activities requirements
associated with capital expenditure.
12Annual Performance 2018/19
2018/19 AUDIT OPINION AND CREDIT RATINGS
At the conclusion of the audit process, Umgeni Water received an unqualified audit from the Office of the
Auditor-General. In other positive developments, both Standard & Poors (S&P) and Fitch Ratings agencies
re-affirmed Umgeni Water's national scale ratings. Fitch Ratings were re-affirmed in September 2018 for
long-term and senior unsecured ratings at AA+ and short-term rating at F1+. S&P ratings were re-affirmed in
July 2018 at zaAAA for long-term and zaA-1+ for short-term. The affirmation reflects stability in Umgeni
Water's stand-alone profile due to cost effective tariffs and relatively stable funds from operations.
BULK POTABLE WATER TARIFF
Umgeni Water is committed to the following principles in its tariff policy:
Promotion of efficient and sustainable use of water
Equitable access to affordable water supply services
Solvency and sound financial management
The average bulk potable water tariff for 2018/19, effective from 1st July 2018, was set at R6.97kl (2017/18:
R6.13kl), reflecting an increase of 13.7%.
CAPITAL INVESTMENT
The budget for the entire Five-Year Capex Programme – 2020/25 - is R8, 912 billion; an allocation of
R2, 82 billion is for rural development projects. The surplus posted in FY 2018/19 will also be used to ensure
that bulk potable water tariffs are maintained at affordable levels
Capital projects under implementation are informed by
Umgeni Water’s Infrastructure Master Plan, which is updated
annually. As part of Umgeni Water’s commitment to
economic transformation, 35% of the total value of each
capital project is allocated to targeted Black-owned
enterprises.
In response to customer water demands and the need to
eliminate backlogs, as at July 2019 an amount of
R1, 58 billion has been committed (2019/20) for bulk water
supply infrastructure development which will be spent as: Mpofana Bulk Water Supply Scheme is a rural
development project that will provide a sustainable
supply of water
Rural development: R408 million
Current and future growth (expansion and augmentation): R139 million
Upgrading and rehabilitation of infrastructure: R808 million
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Umgeni Water has adopted a regional approach to planning for bulk water supply. In this regard its
Infrastructure Programme is aligned to Provincial Government strategies and plans. Infrastructure
development and asset maintenance ensure that it is able to provide assurance of water supply and stability
of its infrastructure. This assists in increasing operational resilience. The organisation’s key objective is to
reduce vulnerability of communities through progressive provision of bulk potable water services.
MAJOR PROJECTS IMPLEMENTED IN 2018/2019 (RANKED BY EXPENDITURE)
Implemented as at 30
Major Total Project
Project name Objective June 2019
Customer Budget (Rm)
30/6/2019(Rm)
Howick West Msunduzi LM,
Reservoir Upgrade Augmentation uMgungundlovu 108 30
(16Ml) DM
Lower uMkomazi
eThekwini MM,
Bulk Water Augmentation 4,210 72
Ugu DM
Scheme
Greater Mpofana
uMgungundlovu
Regional Scheme Development 757 625
DM
Phase 1
uMshwathi Bulk
Water Supply 972 953
uMgungundlovu
Scheme Development
DM, iLembe DM
(Wartburg Phase
1 , 2 & 3)
Mpophomeni uMgungundlovu
Development
WWW DM 389 19
Trust Feed uMgungunglovu
Development
WWTW DM 103 50
Nungwane Raw
Ugu DM and
Water Aqueduct Rehabilitation 185 137
eThekwini MM
(450dia x 18km)
Rehabilitation of
key installations at 179 40
Rehabilitation eThekwini MM
Durban Heights
WTP
Rehabilitation of
Aqueduct No 1,2,3 Rehabilitation eThekwini MM 251 56
&4
South Coast Ph. 2b
Expansion Ugu DM 165 37
(Kelso to Umdoni)
Darvill Sludge
Handling Facility Upgrade Msunduzi LM 87 19
incl Road
Darvill WWW:
Plant Capacity 977 937
Increase (85Ml/d) Upgrade Msunduzi LM
(MBR - 10Ml/d in
3-5yrs)
14Annual Performance 2018/19
Implemented as at 30
Major Total Project
Project name Objective June 2019
Customer Budget (Rm)
30/6/2019(Rm)
Umzinto Water
Upgrade Ugu DM
Works 61 58
Durban Hts:
KwaDabeka eThekwini MM, 126 88
Upgrade
Pumps iLembe DM
Replacement inc
Northern Area
iLembe DM and
Control Systems Upgrade 35 25
eThekwini DM
(PLC Upgrade)
Ndwedwe 1-5 eThekwini MM,
Upgrade 127 58
Pumps iLembe DM
Durban Hgts Shaft
Upgrade eThekwini MM
Pumps 47 29
Midmar WW
uMgungundlovu
Upgrade Ph 2 (250 281 255
DM, eThekwini
to 375Ml/d) & Augmentation
MM and
Midmar Dam
Msunduzi LM
RWPS
Maphumulo Phase eThekwini MM, 200 40
Development
3: 6Ml WW iLembe DM
Wartburg to
uMgungundlovu
Bruyns Hill Development 128 115
DM
Pipeline
Ndwedwe eThekwini MM,
Upgrade 61 61
Pumpstation iLembe DM
POTABLE WATER QUALITY OUTCOMES 2018/2019
Umgeni Water is committed to providing its customers with safe potable water which is suitable for lifetime
consumption. This is achieved through implementing a rigorous water quality management programme
throughout the supply system. This programme is based on a comprehensive, risk-based approach which
includes carefully planned monitoring, water quality assessments, system audits and compliance reporting,
conducted from catchment to consumer and governed by water safety plans.
Umgeni Water continuously reviews water quality risks associated with abstraction, conveyance, treatment
and bulk distribution to ensure that effectiveness of controls is maintained and that water quality is assured.
Potable water quality incidents are managed in accordance with an Incident Management Protocol aligned
to requirements of the South African National Drinking Water specification (SANS 241).
Umgeni Water is also responsible for ensuring that wastewater discharges are not harmful to the
environment and downstream users. This is achieved through development and implementation of
wastewater risk abatement plans. This process includes comprehensive site-specific risk assessments and
15Annual Performance 2018/19
implementation of mitigation plans. Site-specific wastewater incident management protocols have also
been implemented to guide management of wastewater incidents and non-compliance.
All potable water and wastewater sampling and analysis are undertaken in accordance with an ISO 9001
certified monitoring programme and SANAS 17025-accredited laboratory methods. In line with Umgeni
Water’s stakeholder communication plan, information on water quality performance is regularly conveyed
to customers, stakeholders and regulators.
For the 2018/19 period, Umgeni Water’s bulk water supply systems and uMgungundlovu District
Municipality’s schemes were monitored and reported against the five risk categories as specified in the
South African Drinking Water specification: SANS 241:2015.
Umgeni Water is also operating and managing three small water treatment schemes in uThukela District.
These schemes were also monitored and reported against the five risk categories specified in the South
African Drinking Water specification: SANS 241:2015.
Umgeni Water’s bulk water supply systems
The combined 13 Umgeni Water bulk water supply systems recorded excellent performance against all risk
categories specified in SANS 241:2015 Drinking Water specifications as indicated below:
Acute Microbiological Health: 99.94%,
Acute Chemical Health: 100.00%,
Chronic Chemical Health: 99.91%,
Aesthetic: 99.87%
Operational: 99.54%.
uMgungundlovu District Municipality’s (DM) water treatment works (WTW)
In 2015 Umgeni Water was appointed by uMgungundlovu DM to operate, manage and maintain four of its
small water treatment works. For 2018/19, the uMgungundlovu drinking water supply systems recorded
combined excellent performance against all the risk categories specified in SANS 241:2015:
Acute Microbiological Health: 99.61%,
Acute Chemical Health: 100.00%,
Chronic Chemical Health: 100.00%,
Aesthetic: 100.00%, and
Operational: 97.61%.
uThukela District Municipality’s (DM) water treatment works (WTW)
For 2018/19, the uThukela drinking water supply schemes recorded combined excellent performance
against the Acute Health Chemical and Chronic Health Chemical risk categories specified in SANS 241:2015
16Annual Performance 2018/19
Drinking Water specification. A combined unacceptable performance was recorded in Acute Health
Microbiological, Aesthetic and Operational risk categories.
Non-compliances were due to a number of issues, including varying raw water quality, lack of optimisation
or malfunction of treatment chemical dosing systems, challenges with gravity sand filters, insufficient
disinfection and ageing plant infrastructure. Mitigation measures implemented include process optimisation
and training of process controllers. Refurbishment of treatment units at some works has been instituted.
The combined performance against all the risk categories specified in SANS 241:2015 for the uThukela
drinking water supply systems are:
Acute Microbiological Health: 92.59%,
Acute Chemical Health: 100.00%,
Chronic Chemical Health: 99.35%,
Aesthetic: 87.42%, and
Operational: 71.73%.
WASTEWATER QUALITY OUTCOMES 2018/2019
Umgeni Water’s wastewater systems
Performance of wastewater treatment works (WWTW) is assessed against the relevant licence or General
Authorisation General Limits prescribed by the Department of Water and Sanitation. Effluent compliance for
Umgeni Water bulk wastewater systems decreased marginally from 81.7% in 2017/18 to 81.29% in the
2018/19 reporting period.
Darvill WWTW: 73.72%
Howick WWTW: 90.25%
Ixopo WWTW: 94.04%
Lynnfield Park WWTW: 93.59%
One works, Darvill WWTW, achieved 73.72% against a target of 80% (6.28% variance). Non-compliance
recorded for Darvill WWTW was mainly due to construction-related activities, as well as process
overloading, trade effluent inputs, power outages and intermittent spillages from the storm dam. The
upgrade work remains delayed, with the "new" process components being incomplete, thus compromising
efficacy of the treatment process. Completion of the works upgrade remains critical to increase capacity.
uMgungundlovu DM’s wastewater treatment
works
In 2015 Umgeni Water was appointed by
uMgungundlovu DM to operate and maintain five of its
17Annual Performance 2018/19
small wastewater treatment works. Effluent compliance for the uMgungundlovu wastewater systems for
2018/19 was 90.10%.
Richmond WWTW: 96.67%
Cool Air WWTW: 99.62 %
Mpofana WWTW: 77.65%
Camperdown WWTW: 91.67%
Applesbosch WWTW: 88.89%
RISK MANAGEMENT IN 2018/19
Umgeni Water remains mindful of its obligations in terms of the Water
Services Act and Public Finance Management Act, and concurs with the
Code of Good Governance as set out in King Reports. During the year the
organisation dealt effectively with all aspects of corporate governance and
ensured that a robust risk management framework is in place. There is
ongoing monitoring, management and reporting on targets related to
mitigation of strategic and divisional risks.
Potable water produced by Umgeni
Water is excellent in quality
INVESTMENT IN SOCIO-ECONOMIC PROJECTS AND INITIATVES
Rural Development through access to water
In 2018/19 approximately R383 million was spent on implementation of key rural development
infrastructure projects which included:
uMshwathi Regional Bulk Water Supply Scheme
Greater Mpofana Bulk Water Supply Scheme
Lower uMkhomazi Bulk Water Supply Scheme
Maphumulo Bulk Water Supply Scheme Phase 3
Lower Thukela Bulk Water Supply Scheme Phase 1
Wartburg to Bruyns Hill Pipeline
Trust Feed WWTW
Skills enhancement and job creation
At Umgeni Water, skills development remains an essential enabler for employees to excel in their roles in
order to deliver on the entity’s strategy. In this regard, the organisation partnered with Duke Corporate
18Annual Performance 2018/19
Education for co-ordination and implementation of the Management Development Programme (MDP) for
30 Umgeni Water young professionals.
The MDP is a six-month programme presented in four block contact sessions. It was launched on
18th June 2018 and ended in December 2018. The programme aims to equip participants with skills and
techniques to rigorously analyse Umgeni Water’s challenges or opportunities and develop viable solutions. It
is also intended to foster an ethos in which they can use their talents, potential or strengths to become
better leaders.
Umgeni Water has developed strong partnerships with universities, universities of technology, FET colleges
and SETAs to support its skills development initiatives. The entity has continued to maintain strong
partnership with National Treasury to assist in training graduate technicians, technologists, engineers and
scientists for formal registration with the relevant professional bodies. Their skills will be used to address
challenges in targeted rural municipalities.
The organisation grew its pool of Learnership and Apprenticeship in the financial year. Fifty-six Apprentices
and Learners completed Phase 3 of theoretical training at Amajuba TVET College and Shukela Training
Centre in Electrical, Boilermaking, Instrumentation, Motor Mechanic and Mechanical Engineering. Seven
Boilermaking Apprentices completed their trade tests in June 2018 and are now Qualified Artisans. In
2018/19 they were placed in Junior Artisan positions for two years. The remaining Apprentices who
completed Phase 3 will write trade tests in the new financial year.
Two Mechanical Apprentices who started with the programme in 2016/17 completed Phase 2 in April 2018
at Amajuba Training Centre and are currently receiving workplace training at Wiggins and Hazelmere. Two
more Artisan Trainees are currently serving a two-year service obligation in the Boilermaking and
Instrumentation trades.
Regulation 17 of the Water Services Act states that a Water Services Institution is required to employ a
supervisory Process Controller, Process Controllers and Operations and Maintenance support services for
operation and control of a water services works. The Regulation also stipulates that no person shall operate
a water services works unless he/she holds a valid Process Controller Registration Certificate. Therefore, all
Process Controllers must be trained to ensure that they have required skills to operate a water works. The
objective of the Process Controller Training is to improve the skill level of Process Controllers and Shift
Attendants in order to ensure compliance with Regulation 17 and operate the plant efficiently.
Subsequently, in the 2017/18 financial year, 445 Process Controllers from both regions received training in
water and wastewater-related interventions.
19Annual Performance 2018/19
Community Outreach
Water Education
Seventeen initiatives were implemented during the 2018/19 financial year.
Summary of CSI spending per category
CATEGORY Spending (%) Spending (Rands)
EDUCATION AND TRAINING 14% R 1 034 580 00
PUBLIC HEALTH, 41.4% R 2 900 000
COMMUNITY DEVELOPMENT
AND SUPPORT
ARTS, CULTURE AND SPORTS
5% R375 000
ENVIRONMENTAL 19% R1 350 000
CONSERVATION
Eight of these projects were completed. Seven initiatives are planned for completion in 2019 while the
remaining three are long-term projects to be completed in three years to five years.
Education and Training
1.1 Mpophomeni High School (R300 000 invested)
Umgeni Water provided funding for upgrade of one of its classrooms into a laboratory. The project is now
complete and the laboratory is fully functional as per the pictures below
Project for upgrade has been
completed, funded by CSI
20Annual Performance 2018/19
1.2 Linpark High School orphaned learner (R70 000 invested)
Umgeni Water sponsored a grade 12 learner who
is an orphan. The learner was struggling to meet boarding fees in her matric year. The funds were invested
and paid to the school for school fees, boarding, books and stationery.
1.3 Mtholangqondo Secondary School (R20 000 invested)
A printer and photocopying machine was purchased to accommodate the urgent need at the school.
Manager ESD Mr Nhlanhla
Zama at the CSI function with a
school representative
1.4 Ashdown Primary School (R400 000 invested )
e
Funds were utilised to refurbish a hall, purchase a park home to be used as a classroom for Grade R learners
and replace whiteboards. Partitioning of the hall has been completed. The whiteboards have been ordered
and the park home will be delivered in the next few months.
Picture (above): Cheque handover took place before the project commenced.
1.5 Zamazulu High School Disability relief (R94 580 invested)
A Grade 10 learner at Zamazulu High School underwent an operation to amputate her leg as a result of an
infection during childhood. She now relies on crutches as means of mobility. Umgeni Water adopted the
learner for a period of three years (commencing in September 2018). Funds were utilised for prosthetic
consultations and payment for a specialist to order an artificial limb. A temporary prosthesis was fitted to
assess comfort and whether any adjustments would be required before a permanent one is manufactured
and fitted.
21Annual Performance 2018/19
1.6 Umqhele Tutoring Programme (R150 000 invested)
Umgeni Water compiled a programme with support from its young professionals to assist the school with
tutoring matric pupils. The programme, undertaken in October and November 2018, assisted pupils in
Mathematics, Mathematics Literacy, Accounting and Physical Science. The school was pleased with end-of-
year results and has since requested a similar and earlier intervention for this year.
1.7 Richmond Youth & HIV (R300 000 invested)
Umgeni Water partnered with Mlungisi Dongwe Young Heroes, a youth initiative in the Richmond area that
is focused on assisting youth affected by HIV. The initiative provided youth and HIV programmes, such as
camps, where voluntary testing is done. Social workers also form part of the team that includes a medical
doctor. Phase 2 of the youth and HIV programmes for orphaned children and those from child-headed
homes was undertaken during this reporting period. Funds were utilised to host the children for a weekend
camp where voluntary testing and medical and social welfare interventions were undertaken.
Participants (left and below) in the
weekend camp which was a success
22Annual Performance 2018/19
ENGAGING CUSTOMERS AND PROVIDING STRATEGIC SUPPORT TO SPHERES OF GOVERNMENT
Umgeni Water continues to enjoy good relations with the three spheres of Government and other
stakeholders. Some of the engagements that took place included:
An oversight visit to the Lower Thukela Bulk Water Supply Scheme by the Deputy Minister of Water
and Sanitation, Ms Pamela Tshwete, yielded praise for Umgeni Water and its customer, iLembe DM,
for the strides being made in extending water services and reducing backlogs in rural iLembe.
Several engagements were held with the Provincial
Government, Mayors and municipal officials to present Umgeni
Water’s infrastructure development programme and progress with projects.
Representatives of various municipalities and the media were given a high-level briefing by the Chief
Executive of Umgeni Water on the urgency of the uMkhomazi Water Project, which is needed for
eThekwini’s Western Aqueduct. Implementation of the project has encountered various hurdles,
among them environmental objections.
The organisation continues to collaborate with partners across the water sector, both in South
Africa and on the African continent. This is reflected in active participation in the South African
Association of Water Utilities, Water Institute of Southern Africa and the Institute of Municipal
Engineers of Southern African meetings. On the African continent, the organisation has been
firmly positioned through ties with Africa Utiliity Week, a premier conference that is attended by
leaders of water utilities and organisations involved in energy generation and provision.
Engagements took place with all the customers and some of the identified potential customers of
Umgeni Water on bulk potable water infrastructure development and the bulk potable water tariff
for financial year 2019/2020.
Engagements also took place with representatives of civil society and water sector institutions.
As part of legislative requirements, the Shareholder Compact, the Corporate Business Plan and the
Annual Report of Umgeni Water were presented to its Executive Authority and other engagements
took place on matters of a strategic nature, including universal access to water.
Other developments in 2018/2019 were National Government Cabinet changes that resulted in the
amalgamation of the Ministry of Human Settlements and the Ministry of Water and Sanitation to form the
Ministry of Human Settlements, Water and Sanitation. Accompanying the Cabinet changes were the
appointment of a Minister of Human Settlements, Water and Sanitation and an additional Deputy Minister
of Human Settlements, Water and Sanitation. These changes hold exciting prospects for Umgeni Water as it
could create linkages with Human Settlements and further involvement in Sanitation. The three – Human
Settlements, Water and Sanitation – have a seamless and intrinsic link that need to be looked at collectively
when planning occurs for housing and industrial developments.
23Annual Performance 2018/19
LOOKING AHEAD
There are both exciting and interesting times ahead as the institutionalised water sector gears for
implementation of the DWS’ turnaround strategy and its five pillars. These pillars are the National Water
Resources and Services Authority; the National Water Resources and Services Regulator; the Water
Resources and Services Value Chain; a Water Resources and Services Master Plan, and Institutional
Rationalisation and Organisational Alignment. Umgeni Water is looking forward to working closely with both
the Ministry and the Department.
Umgeni Water is convinced that when the five pillars are deeply embedded, the water sector of the future
will look vastly different as sector-wide co-ordination and collaboration in planning and implementation of
human settlements, infrastructure, enhancement of potable water production and quality, increased
coverage of water services provision and simultaneous economic growth and job creation will be the
expected outcomes.
Undoubtedly, changes are required to reduce the extent of fragmentation, improve effectiveness and
efficiencies and achieve economies of scale across the sector. Umgeni Water is in a state of readiness to
embrace the expected changes and it is also geared towards contributing to the establishment of a
streamlined water industry.
Another major focus area will be strengthening of relations with stakeholders. Plans are afoot to intensify
engagements with them in order to keep them fully informed about implementation of infrastructure
projects and other developments, both within Umgeni Water and in the water sector. Umgeni Water is able
to assist Water Services Authorities that are facing challenges with water services provision.
While commissioning of Midmar Water Treatment Works
upgrade remains a 10-year mitigation against possible
water shortages in the Western region of eThekwini and in
uMgungundlovu and Msunduzi, it has also brought to the
fore the need for implementation of the uMkhomazi Water
Project (pictured in artist’s impression left) without further
delay.
The outcomes of performance in FY 2018/19 confirm the organisation’s position as an effective partner of
Water Services Authorities in the delivery of an affordable and a high quality product. The results also bear
testimony to the fact that the organisation has made significant progress towards achieving some of the
developmental objectives of the Republic of South Africa as a Developmental State, with focus specifically
on Government outcomes relating to transformation, empowerment and socio-economic growth.
24Annual Performance 2018/19
Compiled by the Corporate Stakeholder Management Unit, Umgeni Water
310 Burger Street, Pietermaritzburg, 3201, Republic of South Africa
Tel: +27 (33) 341 1111 | Fax: +27 (33) 341 1167
Website: www.umgeni.co.za | Email: info@umgeni.co.za | Toll free no: 0800 331 820
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