Read more... - Umgeni Water

mgeni Water, the largest water board in the Province of KwaZulu-Natal, presented its annual performance
for the Financial Year 2013 – 2014 to the media and other key stakeholders on Wednesday, 22 October
2014, in two separate sessions. Both sessions, held at the Hilton Hotel, were packed to capacity, which
reflects the keen interest that is shown in the business and activities of Umgeni Water, the second-largest water
board in South Africa.
The results produced by Umgeni Water indicate that it continues to play a crucial role in the provision of bulk
potable water and wastewater services. An estimated 5 million consumers ultimately receive the potable water
that is treated and supplied by Umgeni Water to its six municipal customers. The customers of Umgeni Water
are known as Water Services Authorities and comprise: eThekwini Metropolitan Municipality, Msunduzi Local
Municipality, Ugu District Municipality, iLembe District Municipality, uMgungundlovu District Municipality and
Harry Gwala District Municipality.
The results that were achieved in the Financial Year 2013 – 2014 also point to the fact that the organisation is
strategically, financially and operationally ready if, and when, called upon to increase its footprint in KwaZuluNatal and the Eastern Cape where vulnerable Water Services Authorities have been identified by the KwaZuluNatal Department of Co-operative Governance and Traditional Affairs and the Department of Water and
Sanitation for interventions by Umgeni Water in order to ensure sustainable regional bulk water provision. As
part of institutional reform and realignment, the then-Department of Water and Environmental Affairs proposed
that Umgeni Water’s service area be extended to incorporate, in Northern KwaZulu-Natal, the customers of
uThukela Water (Amajuba District Municipality, Umzinyathi District Municipality, uThukela District Municipality
and Newcastle Local Municipality) and in the Eastern Cape Alfred Nzo District Municipality and Ingquza Hill
Local Municipality within the OR Tambo District Municipality.
Despite moderate national economic growth, influenced by the slow-down of the global economy, Umgeni Water
produced some splendid results that now firmly position it for exciting prospects in the new financial year. The
positive outcomes of FY 2013 – 2014 were, however, certainly not without challenges centred on water
shortages and supply interruptions that often tested the organisation’s resilience. Umgeni Water’s fortitude and
determination to continue to entrench its position as a centre of excellence were critical to its overcoming the
challenges it had faced. It can be proudly proclaimed that a significant outcome of 2013 – 2014 activities was an
acknowledgement by a number of municipalities that Umgeni Water has become an integral part of their
endeavours to enhance service delivery.
The following are among the key achievements of the organisation in the financial year under review – all of
which are a tribute to the hard work and commitment of the Board, Management and Staff of Umgeni Water:
The roll out of major infrastructure continues in order to increase assurance of supply and assist in
eliminating water backlogs within and outside of the Umgeni Water operational area. To this end, an
amount of R1.022 billion was spent on capital infrastructure projects - of which R694 million went
towards projects for rural development. When fully operational, the rural projects will enable
municipalities to provide safe drinking water on a sustainable basis to vulnerable communities
In response to customer water demands and the need to eliminate backlogs, beginning July 2014, an
amount of R1.755 billion has been committed for 2014-2015 for bulk water supply infrastructure
development which will be utilised as follows:
- Rural development: R766 million
- Current and future growth (expansion and augmentation): R229 million
- Upgrading and rehabilitation of infrastructure: R657 million
- Other movable assets: R103 million
The organisation intensified high-level engagements across the entire spectrum of stakeholders which
allowed it to deliberate on constraints facing municipalities and work jointly towards resolving problems
that are hindering improved water services provision. In Southern Africa, the organisation continued to
form synergies, the latest of which is a strategic partnership with the Water Utilities Corporation of
The quality of water that was produced by Umgeni Water continued to be classified as excellent against
SANS 241: 2011 for each risk category. This means that drinking water supplied by Umgeni Water is
among the finest available in South Africa;
Despite significant pressure from increased costs in bulk potable water production, the organisation
achieved a surplus of R682 million. The surplus will be used, among others, to:
- Increase liquidity through debt reduction;
- Sustain the R6. 894 billion 5-Year Infrastructure Development Programme that is aimed at assisting
municipalities meet future demand and eliminate water backlogs with the emphasis being on
sustainability of supply;
- Ensure that bulk water tariffs are maintained at an affordable level
Umgeni Water continued to invest in training and development which included the intake of 32 artisan
trainees who have since passed their trade test; the intake of a further 18 artisans for training; intake of
44 trainees under a partnership arrangement with National Treasury; training that is being provided to 8
graduates of the Mangosuthu University of Technology; Management Development training that is being
provided to 55 employees of Umgeni Water at the University of KwaZulu-Natal, and financial assistance
to 55 employees who are furthering their studies
Revenue totalled R2. 204 billion, reflecting an increase of R295 million – or 15% - from the prior year.
Bulk water revenue grew by 13% and volumes by 4%. This, combined with the 7, 5% average tariff,
resulted in an increase of R204 million year on year;
Net finance income increased by 13% due to a higher level of investments and repayment of debt with a
higher interest rate, while strong operating cash flows of R862 million (2013: R854) continue to be
generated. The cash flow stream was enhanced by R245 million in Rural Bulk Infrastructure Grants from
the Department of Water and Sanitation for the social component of rural projects;
Compared to the prior year, production costs increased by 19% due to increases in raw water and
energy costs
There were no audit qualifications, both for the organisation’s predetermined objectives and financial
performance. This translated into a Clean Audit from the Auditor-General SA again this year
The outcomes of Umgeni Water’s financial and non-financial performance, when viewed in their totality, confirm
the organisation’s position as a sustainable and effective partner of Water Services Authorities in the delivery of
an affordable 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 particularly on 7 of the 12 Government outcomes relating to transformation and
A copy of Umgeni Water’s Annual Report for the Financial Year 2013 – 2014 is available on its web site,
Issued by the Corporate Stakeholder Management Unit, Umgeni Water, Pietermaritzburg, KwaZulu-Natal,
South Africa