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&nbs p;   Date: 03/08/2005
Source: Department of Water Affairs and Forestry
Title: Sonjica: Establishment of National Water Resource Infrastructure Agency


Statement by Minister of Water Affairs and Forestry, Ms Buyelwa Sonjica on the approval for the establishment of a National Water Resource Infrastructure Agency

Cabinet today approved the establishment of a National Water Resource Infrastructure Agency (NWRIA) to ensure long term water security for South Africa.

The Agency will take responsibility for developing and operating South Africa’s major national dams and water transfer schemes which are currently managed directly by the Department of Water Affairs and Forestry. These include the Vaal Dam, the Tugela-Vaal transfer system, the Orange River Scheme and the Western Cape system.

The organisation will be a major business in its own right. Its assets are currently valued at nearly R40 billion and bulk water sales bring in more than R2 billion annually.

The aim of Government is to ensure that the long term water needs of the country are met sustainably, equitably and efficiently. The establishment of the Agency will be an important step in this regard.

The agency will also integrate the TCTA, the parastatal organisation responsible for funding the Lesotho Highlands Water Project. It will not be responsible for domestic water supplies which remains the responsibility of municipalities and regional Water Boards.

The decision to establish the Agency is the result of studies that began with the recommendation of the 1998 White Paper on a National Water Policy that the best institutional arrangements for the management of national water resources infrastructure should be determined.

The studies noted that water is a strategic resource for South Africa which faces many water-related challenges, notably extreme rainfall variability which is being aggravated by climate change as well as growing demands from all sectors of the economy and society.

This requires close oversight by Government of decisions related to the development and allocation of water but also effective management of the national infrastructure. A need was also identified to enable funds to be raised for development projects to serve large users from commercial sources in a manner which allows Government’s limited finances to be focused on meeting social needs.

The establishment of an Agency was seen as the best way to address these challenges. Experience with other public utilities has also shown that an agency would be better able to attract, develop and retain scarce technical and professional staff, particularly from the black community.

The Minister of Water Affairs and Forestry will still be responsible for deciding what projects need to be built, in terms of the National Water Resource Strategy. The Agency will be required to make funding arrangements, ensure that projects are designed and built according to appropriate technical, social and environmental standards, and operated effectively and efficiently.

The establishment of the Agency will see a phased integration of the Department’s Water Resource Infrastructure Branch and TCTA, formalising their long-standing co-operation. (The TCTA has already been tasked by the Minister to finance and implement projects such as the Berg Water Project in the Western Cape and a new R2 billion pipeline from Vaal Dam to assure the supplies to Eskom and SASOL.)

The integration of TCTA into the new Agency will be done in a manner that does not affect its obligations to the financial markets, its project credit ratings and explicit government guarantees relating to the Lesotho Highlands Water project. TCTA’s expertise in financial systems and funding models and risk management as well as its financial market track record will be leveraged for the benefit of the Agency.

To establish the Agency by the target date of April 2008, the following milestones will have to be achieved:

* promulgation of a National Water Agency Act during 2006;
* restructuring of the Infrastructure Branch of DWAF to facilitate transfer to the new Agency;
* preparation of a detailed Agency establishment plan; and
* establishment of an effective Utilities Governance component in DWAF to maintain oversight of the new Agency.

* Working with the TCTA, it will also be necessary to
- implement effective financial and organisational management systems;
- implement a transformation plan to address change management, employment equity and service delivery.

Enquiries: Mr Mike Muller
Cell: 082 807 3531
E-mail: yda@dwaf.gov.za
Issued by: Department of Water Affairs and Forestry
3 August 2005
   

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