BUSINESS PLAN Diphetogo - Johannesburg · BUSINESS PLAN 1 Official Sign-off 5.22 List of Acronyms growth, employment and decent work for all3 Chapter 1: Executive Summary sustainable

JOHANNESBURG WATER (SOC) LtdB U S I N E S S P L A N 2 0 1 8 / 1 9

Diphetogo

JOHANNESBURG WATER (SOC) Ltd - 2018/19 Diphetogo BUSINESS PLAN

1

Official Sign-off 2

List of Acronyms 3

Chapter 1: Executive Summary 4

Chapter 2: Johannesburg Water – the entity 6

2.1 Our Vision, Mission and Values 6

2.2 Core Mandate/ Purpose/ Objectives 7

2.3 Key Performance Functions 8

2.4 Past Performance Overview 8

Chapter 3: Strategic Analysis 10

3.1 PESTLE Analysis 10

3.2 SWOT Analysis 11

Chapter 4: 2016 – 2021 IDP Priorities and JW Strategic Goals 12

4.1 Strategic Goal 1: Utilise infrastructure delivery

to create jobs, support SMMEs and attract

investments 14

4.2 Strategic Goal 2: Deliver water and sanitation

services of good quality that is accessible, reliable

and efficient in an environmentally responsible/

sustainable way 27

4.3 Strategic Goal 3: Improve customer and

stakeholder satisfaction 30

4.4 Strategic Goal 4: Enhance sound financial

management, sustainability and clean governance 37

4.5 Strategic Goal 5: Use of technology for effective

and efficient operations 39

4.6 Strategic Goal 6: Invest in our staff to sustain

optimal performance and a service focused

culture with committed people 43

Chapter 5: Sustainable Development Goals 49

5.1 SDG 5: Achieve gender equality and empower

all women and girls 50

5.2 SDG 6: Ensure access to water and sanitation for all 50

5.3 SDG 8: Promote inclusive and sustainable economic

growth, employment and decent work for all 50

5.4 SDG 9: Build resilient infrastructure, promote

sustainable industrialisation and foster innovation 50

5.5 SDG 11: Make cities inclusive, safe, resilient

and sustainable 51

5.6 SDG 12: Ensure sustainable consumption and

production patterns 51

5.7 SDG 13: Take urgent action to combat climate

change and its impacts 51

Chapter 6: Priority Implementation Plans 53

6.1 Priority Implementation Plans 53

6.2 Day-to-day Operations 56

6.3 Batho Pele Principles 57

Chapter 7: Financial Plan 58

7.1 Financial Indicators 58

7.2 Control over Operating Costs 61

7.3 Cash Generated from Operations 63

7.4 Solvency 65

7.5 Capital Projects 65

7.6 Revenue and Tariff Analysis 66

7.7 Proposed Tariff Increase 67

7.8 Proposed Water Restriction Tariff 68

Chapter 8: Management and Organisational Structure 70

8.1 Organisational Structure 70

Chapter 9: Risk Management 72

Annexures 74

Annexure A: Summary of Capital Programmes 75

Annexure B: Strategic Balanced Scorecard 77

Annexure C: KPI Definitions, Calculations and

Means of Verification 80

Annexure D: Financials 84

TABLE OF CONTENTS


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OFFICIAL SIGN-OFF

Ntshavheni MukwevhoManaging Director15 May 2018

Councillor Nico De JagerMember of the Mayoral Committee: Environment, Infrastructure and Services Department15 May 2018


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LIST OF ACRONYMSAcronym DescriptionADP Artisans Development ProgrammeABet Adult Basic Education and TrainingAGSA Auditor General South AfricaAMD Acid Mine DrainageAMI Advanced Metering InfrastructureAMP Asset Management PlansARPL Artisan Recognition of Prior LearningB-BBee Broad Based Black Economic EmpowermentBCM Business Continuity Management BP Business PlanBSC Balanced ScorecardCAPeX Capital ExpenditureCBD Central Business DistrictCDP Community Development ProgrammesCDS Common Distribution SystemCIDB Construction Industry Development BoardCOACt Companies Act of 2008CoJ City of JohannesburgCRM Customer Relations ManagementCSA Customer Support AgentCSC Customer Service CharterDWS Department of Water and SanitationeAM Enterprise Asset Managementee Employment EquityeMS Environmental Management SystemePWP Expanded Public Works ProgrammeeWSetA Energy and Water Sector Education and

Training AuthorityFY Financial YearGDS Growth and Development StrategyGFIS Group Forensic Investigation ServicesGHG Greenhouse GasGVA Gross Value AddHH HouseholdsIAD Internal Audit DepartmentICt Information and Communication TechnologyIDP Integrated Development PlanISO International Organisation for StandardsJW Johannesburg Waterkl kilolitreKPI Key Performance Indicatorlcd Litres per capita per dayLGSetA Local Government Sector Education and

Training AuthorityLoS Level of ServiceLWU Large Water User

Acronym DescriptionMD Managing DirectorMFMA Municipal Finance Management Act of 2003Ml megalitreMSA Municipal Systems Act of 2000MteF Medium-Term Expenditure FrameworkNDP National Development PlanNOSA National Occupational Safety AssociationNQF National Qualifications FrameworkNRW Non - Revenue WaterNt National TreasuryOHS Occupational Health and SafetyOPeX Operational ExpenditurePeStLe Political, Economical, Social, Technological, Legal,

EnvironmentalPMO Project Management OfficePPe Property, Plant and EquipmentPPM Project Portfolio ManagementPRV Pressure Reducing ValvesPWD People with DisabilitiesRPL Recognition of Prior LearningRSSC Revenue Shared Services CentreRW Rand WaterSANS South African National StandardSAP Systems, Applications and ProductsSCM Supply Chain ManagementSDA Service Delivery AgreementSDBIP Service Delivery Budget Implementation PlanSDGs Sustainable Development GoalsSDLA Skills Development Levies ActSetA Sector Education and Training AuthoritySLA Service Level AgreementSMe Small Medium EnterpriseSMMe Small, Medium and Micro EnterpriseSSC Sustainable Services ClusterStS Standard Transfer SpecificationSubed Subsidised EducationSWM Smart Water MeterSWOt Strengths , Weaknesses, Opportunities and ThreatstCtA Trans Caledon Tunnel AuthoritytOD Transit-Oriented DevelopmentVIPs Ventilated Improved Pit-latrinesWC/WDM Water Conservation/ Water Demand

ManagementWDM Water Demand ManagementWWtW Wastewater Treatment WorksWOL War on Leaks

The focal point of the Johannesburg Water (JW) 2018/19 “Diphetogo – Game Changers” Business Plan (BP) is to highlight the revised strategic course of the shareholder as outlined in the 2017/18 Integrated Development Plan (IDP) Review, titled Service with Pride and Dignity read with the Growth and Development Strategy (GDS) 2040. The plan has also taken into account eight of the nine priorities as developed by the shareholder.

The revised strategy advocates a paradigm shift in terms of how service delivery will be conducted within the City of Johannesburg (CoJ) leading to 2021. Table 1 below outlines the GDS 2040 outcomes.

table 1: GDS 2040 Outcomes

Outcome # Outcome Description1 A growing, diverse and competitive economy that creates jobs

2 Enhanced, quality services and sustainable environmental practices

3 An inclusive society with enhanced quality of life that provides meaningful redress through pro-poor development

4 Caring, safe and secure communities

5 An honest, transparent and responsive local government that prides itself on service excellence

Stemming from the review, the City Priorities as outlined in table 2, below, were reiterated as the strategic direction that ought to be adopted towards the achievement of Game Changers, which, when translated into Setswana, is “Diphetogo”.

Chapter 1:Executive Summary


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table 2: Nine City Priorities

Priority 1 Promote economic development and attract investment towards achieving 5% economic growth that reduces unemployment by 2021

Priority 2 Ensure pro-poor development that addresses inequality and poverty and provides meaningful redress

Priority 3 Create a culture of enhanced service delivery with pride

Priority 4 Create a sense of security through improved public safety

Priority 5 Create an honest and transparent City that fights corruption

Priority 6 Create a City that responds to the needs of citizens, customers, stakeholders and businesses

Priority 7 Enhance our financial sustainability

Priority 8 Encourage innovation and efficiency through the Smart City Programme

Priority 9 Preserve our resources for future generations

For ease of implementation and reporting on the City Priorities, CoJ has divided the IDP into various clusters, with the Sustainable Services Cluster (SSC) being the cluster in which JW, amongst others, falls under. Out of the nine City Priorities outlined, the SSC has deliverables and outcomes aligned to priorities 1, 2, 3, 5, 6, 7, 8 and 9 and these are the main areas of focus in the implementation of the set objectives.

In developing the 2018/19 “Diphetogo – Game Changers” BP, JW has fully embraced the City priorities; especially those which fall under the SSC.

The 2018/19 “Diphetogo – Game Changers” BP also takes into account the strategic risk assessment which is aligned to strategic goals outlined for the achievement of the said outcomes and priorities.

The strategic goals identified by the JW Board are as follows:

Strategic Goal 1: Utilise infrastructure delivery to create jobs, support Small, Medium and Micro Enterprises (SMMEs) and attract investment.

Strategic Goal 2: Deliver water and sanitation services of good quality that are accessible, reliable and efficient, in an environmentally responsible/ sustainable way.

Strategic Goal 3: Improve customer and stakeholder satisfaction.

Strategic Goal 4: Enhance sound financial management, sustainability and clean governance.

Strategic Goal 5: Harness the use of technology for effective and efficient operations.

Strategic Goal 6: Invest in our staff to sustain optimal performance and a service-focused culture with committed people.

Outlined below are key strategic interventions that JW wishes to implement in order to realise “Diphetogo – Game Changers”as outlined in the City Priorities read with the revised GDS 2040 outcomes.

» Implementation of a Job Creation Programme, that will increase the number of Expanded Public Works Programme (EPWP) jobs created as well as number of SMMEs supported.

» Continued implementation of the Informal Settlements Upgrade Programme to ascertain that residents have access to basic water and sanitation services as projected.

» Implementation of Infrastructure Investment Programme, with special emphasis on percentage capital expenditure on infrastructure investment on renewal and refurbishment and preventative maintenance.

» Implementation and enhancement of the Water Service Programme, where the quality and standard of water provided is maintained, new water meters are connected within the prescribed timeframes and timeous response to water interruptions and water bursts is upheld.

» Implementation of the Sanitation Service Programme, where there is a reduction of wastewater spills at the Wastewater Treatment Works (WWTW) and timeous response to sewer blockages, as reported.

» Implementation of the Water Revenue Programme, through continued implementation of efforts to reduce the levels of Non-Revenue Water (NRW) and improvement of meter reading levels as this will go a long way in addressing the financial sustainability of JW.

» Implementation of the Water Demand Management Programme, where household consumption of water per day is maintained at acceptable levels.

» In response to the implementation of the Climate Change Programme, JW will continue to monitor the Biogas project, in which methane gas is converted to energy to offset the green gas emissions.

2.1 Our Vision, Mission and Values

VisionsTo be a water and sanitation utility that works

MissionTo provide all the people of Johannesburg with access to quality water and sanitation services by: » delivering a professional, sustainable, affordable and cost-effective service » upgrading services in marginalised areas (pro-poor development) » creating a customer-focused culture that responds to the needs of citizens, customers and business » valuing and developing its employees to build a sustainable capacity » safeguarding public health and safety within the CoJ » preserving natural resources for future generations » managing assets and leveraging on technology

Values » Teamwork » Accountability » Cost Effectiveness » Communication » Customer Service

Chapter 2:Johannesburg Water – the Entity


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2.2 Core Mandate/ purpose/ Objectives

JW was incorporated on 21 November 2000 and commenced business on 1 January 2001.

JW is a municipal entity, wholly owned by the CoJ and is mandated to provide water and sanitation services to the residents of Johannesburg. The Company’s strategic objectives are linked to the shareholder objectives through the Service Delivery Budget Implementation Plan (SDBIP), and the IDP which is further informed by the cluster plans whereby JW is assigned to the SSC. In addition, the relationship between the Company and the shareholder is governed through the Service Delivery Agreement (SDA) which is reviewed from time to time.

The Company provides water and sanitation services to an area stretching from Orange Farm in the south to Midrand in the north, Roodepoort in the west and Alexandra in the east. JW operates within the City’s regions (as depicted in the map under figure 1 below), with 10 network depots and six wastewater treatment plants, and has a staff complement of 2 655.

JW supplies 1 515 Ml/day of potable water, procured from Rand Water (RW), through a water distribution network of 12 066 km, 122 reservoirs and water towers, and 37 water pump stations. The wastewater is then collected and reticulated via 11 576 km of wastewater networks and 38 sewer pump stations. JW treats 841 Ml/day of sewerage at its 6 WWTW, which includes 2 of its biogas-to-energy plants where methane gas is converted to energy1.

Figure 1: City Regions

1 Figures in 2.2 reported as at 30 June 2017.

Region ADiepsloot, Kya Sands, Dainfern, Midrand, Lanseria, Fourways

Region B

Randburg, Rosebank, Emmarentia, Greenside, Melville, Mayfair, Northcliff, Rosebank, Parktown, Parktown North

Region CRoodepoort, Constantia Kloof, Northgate, Florida, Bram Fischerville

Region DDoornkop, Soweto, Dobsonville, Protea Glen

Region eAlexandra, Wynberg, Sandton, Orange Grove, Houghton

Region F Inner City, Johannesburg South

Region GOrange Farm, Weilers Farm, Ennerdale, Lanseria, Eldorado Park, Protea South

A

eBC

F

G

D

Ivory Park

DiepslootMidrand

Woodmead

Wynberg

AlexandraBruma

Northgate

Roodepoort

Aeroton

South GateLanseria

Ennerdale

Orange Farm

SowetoDiepkloof

RosebankParktown

Johannesburg CBD


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2.3 Key performance Functions

JW exists and operates as an entity in order to provide water and sanitation services to the residents of CoJ.

The key deliverables of JW are aligned to the strategic objectives and “Diphetogo – Game Changers” as advocated by the Executive Mayor.

JW endeavours to provide quality drinking water to its residents through reservoirs, water towers and other storage mechanisms. The quality of drinking water is maintained based on guidelines provided by the Department of Water and Sanitation (DWS). The commitment to this stance is further corroborated by the continuous achievement of the Blue Drop status on a yearly basis.

In upholding the Customer Service Charter (CSC) Standards requirements, JW ensures that day-to-day operational matters, such as responses to new water connections, sewer blockages, burst water pipes, meter reading as well as planned/ unplanned water interruptions are conducted within the set timelines.

In improving a focused customer culture, JW has continual customer and stakeholder engagements with CoJ residents through various mediums including radio interviews, live broadcasts, print leaflets, website and social media. Stakeholder engagements go as far as having meetings with ward councillors, various SMME forums, faith-based organisations, customer focus groups, educational institutions (i.e. schools) and community members at large. The content of communication engagements includes messages around water service interruptions (i.e. planned and unplanned), water restrictions, water contamination, water conservation, sewer infrastructure usage, etc.

In enhancing service delivery, JW is continually investing vast amounts of capital in infrastructure expansion, upgrade, repairs and maintenance across all the regions within the CoJ. Given the growth in population and increased number of informal settlements, JW further provides basic water and sanitation services in various informal settlements. This act goes a long way in showing respect and dignity to the residents and citizens of CoJ.

2.4 past performance Overview

Table 3 below reflects the highlights of service delivery past performance and targets for the 2015/16 and 2016/17 financial periods. The performance against targets for some indicators was not achieved and the organisation will focus in those areas to improve performance.

On the positive side the trend on the indicators indicates an increase in performance year-on-year which impacts service delivery positively. The NRW targets remain a challenge which will somewhat be alleviated through the increased capital outlay on infrastructure investment programmes.


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table 3: Service Delivery Past Performance Overview

IDP Programmes /Priorities Key Performance Indicator (KPI) 2015/16 Target

2015/16 Actual

2016/17 Target

2016/17 Actual

enhanced Service Delivery Metered connections readon a monthly basis

95% 87.50% 95% 84.09%

Developmental Service Delivery

Total Broad Based Black Economic Empowerment (B-BBEE) procurement recognition spent from Qualifying Small Enterprises Exempted Micro Enterprises

125% 118% 125% 127%

Reliable Services Water burst restored within 48 hours as a percentage of jobs reported

95% 84.29% 95% 90%

Sewer blockages cleared within 24 hours as a percentage of jobs reported

96% 93.46% 95% 95%

Compliance with drinking water standard (SANS 241)

99% 99.80% 99% 99.80%

Basic Services Informal households (HH) with access to water – Level of Service (LoS)

91.14% 96.15% 97.84% 97.89%

Informal HH with access to sanitation- LoS

46.37% 46.59% 46.80% 46.59%

Demand Side Management

Water consumption per capita in litres (lcd)

308 lcd 309 lcd 305 lcd 288 lcd

% NRW 32% 35.3% 30% 40.3%

Chapter 3:Strategic Analysis

3.1 peStLe analysis

This model involves the collection and portrayal of information about external factors which have, or may have, an impact on JW. These factors are detailed in table 4 below.

table 4: PeStLe Strategic Analysis

Category FactorsPolitical » Revised local government arrangements

» Service delivery protests » Non-payment for services and illegal connections

economical » Increased water tariffs » Low growth rate » High unemployment rate » Low payment and/or non-payment for services » Uncertain economic outlook (imminent downgrade by ratings agencies) » Lack of funding


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Category FactorsSocial » Increase in population

» Increased need for services in informal settlements » High density settlements » Consumer awareness/ignorance on infrastructure usage » Lower consumer awareness on service charter » Encroachment by informal settlements over servitudes and infrastructure

technology » Rapid change in technology » Smart City requirements (i.e. STS Smart Metering pilot project) » Standard Transfer Specification (STS) » Communication infrastructure gaps » Inadequate research and technology

Legislative » Compliance to legislative prescripts relevant to JW » By-laws enforcement

environment » Flooding » Quality and environmental standards » Increased water demand » Water restrictions » Carbon emissions » Acid Mine Drainage (AMD) » Alternative water sources

3.2 SWOt analysis

The Strength, Weakness, Opportunity and Threats (SWOT) analysis as outlined in table 5 below highlights the operating environment opportunities and threats together with JW’s strength and weaknesses. The JW strategic goals as identified strive to enhance the strength and opportunities and in the same breath apply mitigating strategies to address the weaknesses and threats identified.

table 5: SWOt Analysis

INte

RNA

L FA

CtO

RS

Strengths » Industry knowledge » Committed and knowledgeable personnel » Risk resilient » Disaster Management mechanism » Corporate governance structure » Strong revenue base

Weaknesses » Inadequate City Wide integrated planning » Aging infrastructure » Inadequate capital investment/ funding » Unfavourable financial position (cash flow and liquidity) » Reactive maintenance programme » Prolonged change implications of integration to CoJ » Business continuity

eXte

RNA

L FA

CtO

RS

Opportunities » Alternative water sources such as treated AMD as well as Boreholes

» New technology (smart meter) » Effluent reuse

threats » Water demand outstrips supply » Adverse economic outlook » Climate change effects » Wastewater pollution on river system » Water restrictions » Service delivery protests (delayed service delivery and increased project costs implications)

» AMD in an untreated form

During the 2017/18 IDP review, the City highlighted nine priorities that should be focused on, in order to attain the intended outcomes by 2021 and these are listed in table 6 below:

Table 6: Nine City Priorities

Priority # Priority Description1 Promote economic development and attract investment towards achieving 5% economic growth that

reduces unemployment by 2021.

2 Ensure pro-poor development that addresses inequality and poverty and provides meaningful redress

3 Create a culture of enhanced service delivery with pride

4 Create a sense of security through improved public safety

5 Create an honest and transparent City that fights corruption

6 Create a City that responds to the needs of citizens, customers, stakeholders and businesses

7 Enhance our financial sustainability

8 Encourage innovation and efficiency through the Smart City Programme

9 Preserve our resources for future generations

Given that JW falls under the SSC, the strategic goals outlined are aligned to the specific priorities under the cluster being priorities 1, 2, 3, 5, 6, 7, 8 and 9.

Chapter 4:2016 – 2021 IDP Priorities and JW Strategic Goals


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Table 7 below demonstrates the alignment of the JW strategic goals to the City priorities and game changers.

Table 7: JW Strategic Goals aligned to City Priorities and Game Changers

JW Strategic Goal City Priority and Game ChangerStrategic Goal 1Utilise infrastructure delivery to create jobs, support SMMEs and attract investments

Priority 1Promote economic development and attract investment towards achieving 5% economic growth that reduces unemployment by 2021.

Priority 2Ensure pro-poor development that addresses inequality and poverty and provides meaningful redress

Diphetogo - Game ChangerJobs, infrastructure and economic development

Strategic Goal 2Deliver water and sanitation service of good quality that is accessible, reliable and efficient in an environmentally responsible/sustainable way

Priority 3Create a culture of enhanced service delivery with pride

Priority 6Create a City that responds to the needs of citizens, customers, stakeholders and businesses

Priority 9Preserve our resources for future generations

Diphetogo - Game ChangerJobs, housing and infrastructure

Strategic Goal 3Improve customer and stakeholder satisfaction

Strategic Goal 4Enhance sound financial management, sustainability and clean governance

Priority 5Create an honest and transparent City that fights corruption

Priority 7Enhance our financial sustainability

Diphetogo - Game ChangerFinance

Strategic Goal 5Use of technology for effective and efficient operations

Priority 8Encourage innovation and efficiency through the Smart City Programme

Strategic Goal 6Invest in our staff to sustain optimal performance and service-focused culture with committed people

Priority 3Create a culture of enhanced service delivery with pride


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4.1 Strategic Goal 1: Utilise infrastructure delivery to create jobs, support SMMes and attract investments

STraTEGiC Goal 1

Priority 1: Promote economic development and attract investment towards achieving 5% economic growth that reduces unemployment by 2021.

Priority 2: Ensure pro-poor development that addresses inequality and poverty and provides meaningful redress

Diphetogo - Game Changers: Jobs, infrastructure and economic development

Infrastructure Investment Programme

JW Infrastructure Investment Programmes are geared towards ensuring that the CoJ GDS 2040 is accomplished. The City has identified nine priorities in order to streamline strategic key performance areas with a view of enhancing performance and strengthen the ability of the City in achieving the IDP 2016-21 and 2040 GDS outcomes. In order to contribute to the accomplishment of 2040 GDS, JW has identified various programmes that are key in the achievement of City’s strategic objectives focused mainly on upgrade and renewals of networks, expansion of wastewater treatment works, storage capacity and water demand management initiatives. The programmes have also taken into account the national outcomes as reflected below:

» outcome 2: A long and healthy life for all South Africans. » outcome 4: Decent employment through inclusive economic growth. » outcome 5: A skilled and capable workforce to support an inclusive growth path. » outcome 6: An efficient, competitive and responsive economic infrastructure network. » outcome 8: Sustainable human settlements and improved quality of household life. » outcome 10: Environmental assets and natural resources that is well protected and continually enhanced.

Existing Infrastructure for continued service delivery and long-term profitability

JW has total infrastructure assets with Current Replacement Cost of R61 billion. The infrastructure consists mainly of Water Networks (12 066 km), Sewer Networks (11 576 km) Water and Sewer Pump Stations (78), Reservoirs and Water Towers (125 with combined capacity of 1 898 Ml) and WWTW (6 with combined capacity of 1 068 Ml).

Asset Management Plans (AMP) dictate a renewal rate of 2% per year of assets replacement value. Current expenditure pattern indicates that an average renewal rate of 1.1% has been achieved with current funding allocations. The Company has infrastructure renewal backlog of approximately R5.8 billion as a result of underfunding which has also lead to having 25% of asset base that has remaining useful life of less than 10 years. The renewal backlog requirement is categorised as follows: » Water mains replacement: R861 million » Sewer mains replacement: R1.9 billion » Water and sewer capacity upgrading backlog: R2.8 billion » Backlog for wastewater treatment works plant and equipment replacement R238 million


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Figure 2 below indicates the entire assets portfolio and its current conditions.

Figure 2: assets Condition Profile

CoNDiTioN ProFilE - ENTirE aSSET PorTFolio

The resultant value of critical assets that require replacement/renewal is R12.65 billion (over the next 10-year period). This equates to a requirement of R1.265 billion per annum over the next 10 years for capital replacement/renewal which is currently a barrier due to funding allocation/availability. In addition to the aforementioned existing infrastructure backlog, R500 million would be required annually for upgrade and expansion backlog on new infrastructure.

The total water upgrading and renewal requirement is R974 million per year and is further detailed below: » Water pipes renewals requiring R415 million to replace 1.5% of its asset value » Reservoirs rehabilitation require R120 million » Water pump stations renewals require R8 million » Water upgrading and extensions require R431 million

The outcome of the water networks infrastructure renewal/replacement would be reduced bursts, improved response times and improved water supply.

The total sewer upgrading and renewal requirement is R821 million per year and is further detailed below: » Sewer pipe renewals require R435 million to replace 1.5% of its asset value » Sewer pump stations renewals R4 million » WWTW renewal R280 million » Sewer upgrading and extensions require R102 million

The outcomes of the wastewater infrastructure renewal/replacement are reduced sewer blockages, improved response time, reduction in sewer spills at wastewater treatment works and improved effluent/sludge quality.

The short- and medium-term interventions to alleviate challenges with infrastructure failures are as follows: » Consider the establishment of first line response teams to assist in reducing time of water wastage when bursts do occur. » Improved pressure management which includes preventative maintenance on all Pressure Reducing Valves (PRV) and extending smart controlled PRV installations.

» Implement a preventative maintenance programme on all 300 mm diameter valves and greater. » Improve sewer preventative maintenance from covering 1 000 km per year with hydro jetting to a further 1 000 km per year with depot based cleaning via manual sweeping of sewer lines.

» Improved productivity of teams to attend to six water and five sewer jobs per day per team. » Implement a Workforce Optimisation Programme which will include, central dispatching of teams, electronic job cards, route planning and improved customer feedback.

12% - Very Good

31% - Good

33% - Fair

13% - Poor

11% - Very Poor


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» Increase capacity at WWTW – Expand Northern Works (50 Ml/day) and New Lanseria Works (50 Ml/day) » Construct 7 new reservoirs and towers which will serve a total of 47 750 household equivalent (Blue Hills – 1.8 Ml, Woodmead - 20 Ml, Halfway House - 20 Ml, Erand – 0.75 Ml, Robertville - 2.25 Ml, Aeroton – 1.4 Ml and Crown Gardens – 1.1 Ml).

In response to infrastructure renewal needs or backlog, JW proposed budget over the three years amount to R3.1 billion. Table 8 below provides a detailed breakdown of the capital budget per category. In 2018/19 a total of R910 million will be invested in various programmes. These programmes have been structured in a manner that they respond to political direction of the new administration, City Priorities, JW strategic goals and the related Diphetogo - Game Changers.

Table 8: Three-Year Capital Budget

Category 2018/19 R’000

2019/20 R’000

2020/21 R’000

Corporate Requirements 18,660 4,500 4,500

Water Demand Management 105,360 249,750 40,206

Operate and Maintain 89,000 111,000 51,000

Upgrading and Renewal 310,120 518,182 437,744

New Infrastructure 80,000 87,000 36,000

Planning and Engineering Studies 8,000 10,000 10,000

Information Technology 10,000 10,000 10,000

Marginalised Areas Program 76,000 31,000 156,000

Bulk Wastewater 203,500 230,000 240,000

ToTal 900,640 1,251,432 985,450

Figure 3 below indicates the split of the Capital Expenditure (CAPEX) programme with a bigger emphasis on infrastructure upgrade and renewal to ensure that the existing infrastructure does not deteriorate.

Figure 3: Capex per Programme

2018/19 - PerCenTaGe CaPex Per ProGramme

12%

23%

18%

16%

3%

9%

19%

0%

5%

10%

15%

20%

25%

Water Demand

Management

WWTW Expansion

and Renewal

Water Network

Upgrading & Renewal

Sewer Network

Upgrading & Renewal

Access to Basic Services:

Water

New Infrastructure

Other Programs


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Wastewater Treatment Works Programme

In support of GDS 2040 outcomes, JW has planned to roll out a series of high-level projects and interventions that seek to increase the current infrastructure capacity in order to support CoJ economic development’s needs. Lanseria (50 Ml) wastewater treatment works is one of the major capital projects intended to be implemented; however due to lack of funding, implementation will be delayed. It is envisaged that the actual construction will commence in 2020/21 financial year after environmental authorisation process has been completed. Upon completion, the project will provide additional capacity to 50 000 HH equivalent. This project will also relieve the current pressure on Northern WWTW, while also unlocking economic developments, which will result in job creation and poverty alleviation within the City. This project will further positively contribute in protecting the environment and mitigating against climate change in that with less pressure on Northern WWTW, spills into the environment will be reduced as well as the treatment of sewer at the new Lanseria works will be done in a more energy efficient manner with newer technologies for pumps motors and gearboxes being implemented. It will further positively impact on the environment in that a number of network pump stations will be decommissioned due to the fact that sewer will then flow by gravity to the new works instead of being pumped.

JW will continue to roll out bulk wastewater infrastructure projects which include upgrades, renewals and expansion in 6 WWTW. Design work of Northern WWTW Unit 5 Module 2 has been initiated in the current financial year (2017/18). It is envisaged that construction will commence towards the end of 2018/19 financial year. Upon completion, the project will provide CoJ with an additional 50 Ml/day sewerage treatment capacity. As a result of additional capacity CoJ will be in an advantageous position for unlocking development as additional 50 000 HH equivalent can be connected to the works. Through this process more jobs will be created within the City, unemployment rate reduced while SMMEs are supported through sub-contracting during the implementation of the project.

Table 9 below reflects the 2018/19 projects and anticipated upgrading and renewal budget for subsequent years.

Table 9: Wastewater Treatment Works Programme

Project Additional Capacity 2018/19 Budget(R’000)

2019/20 Budget (R’000)

2020/21 Budget (R’000)

Output

Olifantsvlei Heating and Mixing

Operational efficiency Improvement

29,000 42,000 27,000 Operational Efficiency Improvement

Job Creation and SMMEs supportBushkoppies Balancing Tank

Operational Efficiency Improvement

42,500 40,000 28,000

Ennerdale Operational Efficiency Improvement

6,000 0 17,000

Goudkoppies Refurbishment


30,000 56,000 7,000 Environmental protection

Northern Works Expansion and Refurbishment (Unit 5 Module 2) – 50 Ml/d

50 Ml/d 56,000 75,000 119,500 Additional 50 000 h/h equivalent

Attract Investment

Create Jobs and Support SMME’s

Driefontein Concrete Lining


34,000 6,000 17,000 Operational efficiency Improvement

Job Creation, SMMEs support and Environmental protection

Lanseria WWTW (50 Ml/d)

50 Ml/d 5,000 5,000 5,000 Additional 50 000 h/h equivalent

Attract Investment

Create Jobs and Support SMMEs

WWTW Replacement General (Including Ennerdale)

1,000 6,000 19,500 Operational efficiency Improvement

Job Creation, SMMEs support and Environmental protection

ToTal 100 ml/d 203,500 230,000 240,000 100 000 h/h


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Pipe Replacement Programme

Over the past five years, JW has managed to replace a total of 461 km and 78.8 km of water and sewer network respectively. This programme is designed towards ensuring continued reduction of NRW, pipe bursts and sewer blockages throughout the City and to sustain a good level of service to City customers. JW will continue in the coming year to replace water and sewer network infrastructure that has remaining useful life of less than two years.

It is estimated that on average JW pipe replacement per year should amount to R415 million for water and R435 million for sewer, in order to meet the pipe renewal target of replacing 1.5% of its asset value per year. It is evident that over the past 10-year period JW has never met this target and in the past three years the performance has been going down and it therefore means that over the years a lot of infrastructure backlog has been created. See figure 4 below.

Figure 4: JW infrastructure renewal rate

WaTEr aND SEWEr iNFraSTruCTurE rENEWal raTE

Figure 4 above provides detailed past performance of infrastructure renewal rate which included pipe replacement at a target of 1.5%. In order to ensure continues provision of quality services JW intends to continue with pipe replacement programme in the current term of office and a total of 701 km of water network and 280 km of sewer network will be replaced, starting with 67 km and 34 km in the current year (2017/18). In 2018/19 a total of 80 kilometres of water and 42 km of sewer network will be replaced. It should be noted that the planned 2018/19 pipe replacement km only represent 0.65% and 0.35% renewal rate of water and sewer respectively which fall short of the required 1.5% renewal rate per year.

In the rolling out of the Pipe Replacement Programme JW intends to use SMMEs and local labourers, so as to create jobs and transform the social and economic standing of the City’s residents. The rolling out of pipe replacement will ensure that the number of bursts per km and number of blockages per km are reduced, which will result in improved levels of service in CoJ.

Figure 5 below shows that the number of blockages and bursts per km has been increasing since 2012/13 financial year, while figure 6 also shows the increase in the number of bursts and blockages per year. Figures 5 and 6 below do affirm that lower capital funding on renewal rate has a direct impact on quality of services rendered to the citizens.

0,00

0,20

0,40

0,60

0,80

1,00

1,20

1,40

1,60

1,80

Rene

wal

Rat

e %

Sewer PRP Renewal Rate (%) Water PRP Renewal Rate (%) Target Renewal Rate (%)


19

Figure 5: Number of Burst/Blockages per km

Figure 6: Burst/Blockages per year

In order to improve the quality of level of service JW renders to its community, pipe replacement programme has been identified as critical in ensuring that reduction of water burst frequency is achieved.

2012/13 FY 2013/14 FY 2014/15 FY 2015/16 FY 2016/17 FY

Bursts/km 3.0 2.7 2.7 3.2 3.8

Blockages/km 4.2 4.3 4.5 4.6 4.9

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Num

ber o

f Bur

sts

or B

lock

ages

/km

2012/13 FY 2013/14 FY 2014/15 FY 2015/16 FY 2016/17 FY

Bursts/year 33 539 33 779 31 131 38 058 45 177

Blockages/year 44 613 46 280 47 981 54 269 57 769

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

Num

ber o

f Bur

sts

or b

lock

ages

/yea

r


20

Table 10 below details a plan of water pipe replacement with an average renewal rate of 0.81% per year.

Table 10: Water Pipe replacement Plan (km)

City Regions2018/19 2019/20 2020/21 Total

Length (m) Length (m) Length (m) Length (m)Region A 7 344 6 600 3 000 16 944

Region B 10 009 18 265 20 265 48 539

Region C 22 001 19 024 15 024 56 048

Region D 20 300 20 008 25 002 65 310

Region E 10 019 46 108 1 108 57 235

Region F 10 326 19 340 29 666

Total 79 999 110 005 83 739 273 743

renewal rate 0.65% 0.89% 0.68% 0.74%

Table 11 below, shows the detailed sewer pipe replacement plan per region for three years city-wide. These sewer projects will also assist in reducing the sewer blockages as most of these areas are experiencing high sewer blockages. Replacement of 204 km equates to replacement of 53 km per annum at an average renewal rate of 0.45%.

Table 11: Sewer Pipe replacement Plan (km)

City Regions2018/19 2019/20 2020/21 Total

Length (m) Length (m) Length (m) Length (m)Region A 1 916 9 520 1 020 12 456

Region B 6 943 7 420 8 420 22 783

Region C 10 941 18 000 5 000 33 941

Region D 10 238 11 720 10 400 32 358

Region E 10 705 9 520 7 100 27 325

Region F 958 15 882 13 950 30 789

Total 41 700 72 062 45 890 159 652

renewal rate 0.35% 0.60% 0.39% 0.45%

Upgrades and Storage Infrastructure

In accordance with the IHS Global Insight, the population of Johannesburg increased by 11.6% between 2011 and 2017, to 4.9 million. Growth in population has a direct relationship with the demand for water infrastructure that is capable to meet population needs with regard to quality water supply, within 24 hours and a correct pressure. Through the Infrastructure Upgrades Programme JW intends to meet the CoJ’s ever-growing population’s needs, which in return will support the City’s economic growth target and attract investment. It should be noted that the ability of JW to provide good and reliable infrastructure that offers better and quality water services, provides a base for investors’ confidence in the City.

In the 2018/19, JW will continue on rolling out network infrastructure upgrades projects. These projects will enable CoJ to be a preferred investment destination given its ability to offer business opportunities through its infrastructure. Infrastructure upgrades projects upon completion will ensure a continuous development of key municipal developmental nodes within the City.


21

JW is committed to 24-hour reservoir service storage in terms of the CSC. In rolling out networks upgrade projects, JW will also construct a total of 2 new reservoir storages and 5 water towers. Over the remainder of the five-year period it is projected that the opportunity to provide additional capacity of 47 750 HH equivalent will be created. Table 12 below provides detailed descriptions of the planned reservoirs and their projected outputs.

Table 12: Storage Capacity Projects and output

Project Storage Capacity

Proposed Budget 2018/19(R’000)

Output COJ Region

Erand Tower 0.75 Ml 20,000 Additional water storage of 500 h/h equivalent A

Woodmead reservoir 22 Ml 10,000 Additional 22 000 h/h equivalent E

Halfway House reservoir

20 Ml 8,000 Additional 20 000 h/h equivalent A

Blue Hills Tower 1.8 Ml 5,000 Additional 1 000 h/h equivalent A

robertville Tower 2.25 Ml 10,000 Additional 2 250 h/h equivalent C

aeroton Direct Tower 1.4 Ml 15,000 Additional 1 000 h/h equivalent F

Crown Gardens Tower 1.1 Ml 12,000 Additional 1 000 h/h equivalent F

ToTal 49.3 ml 80,000 aDDiTioNal 47 750 H/H EquivalENT

Economic Development Nodes

In an effort to re-energise the City’s economy, CoJ has identified economic developmental nodes that need attention in the current term of office (2017-2021), being Inner City, Randburg, Roodepoort (Mining Belt) and Transit-Oriented Development (TOD) areas. In support of political strategic direction, JW has planned various projects that seek to support economic activities within the identified nodes. In the Inner City, JW will continue to implement a superimposed sewer project that is geared towards resolving sewer problem in Bruma Lake. Investigations have been done with phase one of the project currently under implementation. JW has also planned to finalise the refurbishment of Hector Norris pump station starting in the 2017/18 financial year. With regards to Randburg and Roodepoort nodes, JW will continue to engage with the City’s planning department in order to align its programme with the City’s vision and strategic direction on these two nodes. TOD areas are one of CoJ’s special programmes that are designed to correct the imbalances of the past. The programme is geared towards ensuring that high-density human settlements are developed within the CoJ. This initiative will ensure that people come closer to the City or working zones, while also being provided with mobility through public transport (Rea-vaya).

In support of TOD, JW has identified various capital projects that are geared to support the expected population and economic activities within the nodes. The Company will provide additional water supply infrastructure and sanitation services capacity to support higher density settlements. The initial plan was to commence with projects construction in 2015/16; however due to revised budget, only designs have been completed. It is anticipated that construction will commence in the 2019/20 financial year. It should be noted that the current system has sufficient capacity to support development in the medium term and that funding will be allocated to ensure the ultimate development scenario. Table 13 below provides detailed projects which JW will implement in support of the programme.


22

Table 13: Economic Development Nodes

Node Project Names 2018/19Budget(R’000)

2019/20Budget(R’000)

2020/2021 Budget(R’000)

Output

louis Botha Water Upgrade (1.4 km) and 37 Ml Reservoir (Linksfield)

10,000 5,000 16,000 Support densification initiatives on economic development areas or zones

Job Creation and SMME support

Promote private investment

Sewer Upgrade (5.4 km) 2,000 - -

Empire Perth Water Upgrade (7.2 km) and 26 Ml reservoir (Hursthill) and 2 Ml Tower Brixton

1,000 5,000 13,000

Sewer Upgrade (3.5 km) - - -

Turffontein Water Upgrade (2.2 km) and 2.5 Ml Water Tower(Forest Hill)

- 1,000 -

Sewer Upgrade (5.1 km) - - -

ToTal 13,000 11,000 29,000

Inner City Programme

The Inner City Programme comprising the Johannesburg Central Business District (CBD) and adjacent suburbs has been defined as a priority development node for the CoJ. Similar to the TOD areas, its vision is to provide higher density mixed use development in support of the GDS.

JW has defined a number of upgrading and renewal projects required to support the proposed development. A total need of approximately R252 million has been identified for infrastructure upgrading and renewal. In the 2018/19 to 2019/20 financial years, a provision of R70 million, divided between water (R30 million) and sewer (R40 million) for renewals respectively, has been made. These budgetary allocations form part of the JW’s infrastructure renewal and upgrade programme.

Figure 7 below, represents the projected spend on infrastructural development for growth in the Inner City for Water from 2018/19 through to 2020/21. It also incorporates the National Outcome, the IDP programme as well as related GDS outputs and outcomes, including the Key Performance Indicators (KPIs).

JOHAN

NESBU

RG WATER (SOC) Ltd - 2018/19 D

iphetogo BUSIN

ESS PLAN

23

Figure 7: inner City infrastructure Development - Water

National outcome Sustainable Human Settlements an Improved Quality of Household Life

Key iDP Programme Environmental Sustainability and Climate Change

GDS outcome A resilient, liveable, sustainable urban environment – underpinned by infrastructure supportive of a low carbon economy

GDS related output Sustainable and Integrated Delivery of Water, Sanitation, Energy and Waste

KPi Renewal of water pipelines in order to reduce the rate of burst pipes and support development

Baseline New 2016/17 FY

Approved Target2017/18 FY

Revised Target 2017/18 FY

Target 2018/19 FY

Target 2019/20 FY

Target 2020/21 FY

N/A Pump station upgrade Pump station upgrade and 10 km of pipes to be replaced

5 km of pipes to be replaced

10 km of pipes to be replaced

Programme R’000

Opex/CapexBudget

OriginalBudget

2017/18

Change RevisedBudget

2017/18

IndicativeBudget

2018/19

Change DraftBudget

2018/19

DraftBudget

2019/20

DraftBudget

2020/21

LeadCluster

ImplementingDepartment

Infrastructure Upgrades and Renewal

Capex - 13,000 13,000 30,000 (20,000) 10,000 10,000 10,000 EISD JW

JOHAN

NESBU


iphetogo BUSIN

ESS PLAN

24

Figure 8 below, represents the projected spend on infrastructural development for growth in the Inner City for Sewer from 2018/19 through to 2020/21. It also incorporates the National Outcome, the IDP programme as well as related GDS outputs and outcomes, including the KPIs.

Figure 8: inner City infrastructure Development – Sewer



GDS outcome A resilient, liveable, sustainable urban environment – underpinned by infrastructure supportive of a low carbon economy


KPi Renewal of sewer pipelines in order to reduce the rate of bursts pipes and support development

Baseline New 2016/17 FY



Target 2018/19 FY

Target 2019/20 FY

Target 2020/21 FY

3.5 km of pipe to be replaced

8 km of pipe to be replaced 3 km of pipe to be replaced 4 km of pipe to be replaced

24 km of pipe to be replaced

Programme R’000

Opex/CapexBudget

OriginalBudget

2017/18


2017/18

IndicativeBudget

2018/19

Change DraftBudget

2018/19

DraftBudget

2019/20

DraftBudget

2020/21

LeadCluster


Infrastructure Upgrades and Renewal

Capex 10,000 13,500 23,500 10,000 - 10,000 15,000 15,000 EISD JW

Repairs and Maintenance (Water and Sewer Networks)

JW experiences a large number of pipe failures, blockages and bursts on both water and sewer mains especially hotspot areas like Ivory Park, Alexandra, Diepsloot, Orange Farm and sections of Soweto. As a result of high level of water pipe burst and sewer pipes blockages JW runs the risk of not adhering to its CSC with regards to response time.

In an effort to mitigate the identified risk, JW intends to expand its repairs and maintenance programme that has been implemented in Alexandra Township always referred to as “Alex Model”. The programme intends to appoint local ‘as and when’ contractors with the necessary expertise to attend to infrastructure failures on the water and sewer infrastructure on behalf of the Company. The purpose of this programme is to ensure that problems are attended to timeously, with the added benefit of local business opportunities which leads to addressing unemployment in these targeted areas. The programme intends to support 25 SMME contractors starting from 2017/18 from the local communities with relevant Construction Industry Development Board (CIDB) grading. It is anticipated that 175 jobs will be created in 2018/19 financial year, while the same target is planned for the current year.


25

The ratio of operating budget to carrying value of PPE for repairs and maintenance is currently at an annualised percentage of 10.9% (this includes labour as required by the Accounting Standards Board). This exceeds the 10% in alignment with the city Diphetogo - Game Changers. It must be highlighted that the current expenditure on repairs and maintenance is mainly on a reactive basis which is not ideal (0.1% is preventative). The aim is therefore to start in the 2018/19 financial year to create a balance between reactive and preventative maintenance and to move to a 50/50 spilt of the targeted 10% by 2020/21. The plan is to increase the rate of preventative maintenance on all electro-mechanical equipment, large diameter valves (>300 mm diameter) and sewer network infrastructure. Sewer network preventative cleaning will move from 1 000 km per year to 2 000 km per year. The change from reactive to preventative maintenance will be achieved with the existing human resources at JW. This is possible when R1 billion capital funding is spend on replacement/refurbishment of existing infrastructure per year from 2018/19. This implies that fewer failures need to be attended to and therefore resources usually used to do reactive work will be freed up to do preventative work. Increased preventative maintenance will ensure reduced infrastructure failures and improved service standards which is in line with the City priorities.

Job Creation Programme and SMME Support

The National Development Plan (NDP) has targeted to reduce South African unemployment rate to 6% in 2030. The Quarterly Labour Force Survey Quarter 4 - 2017 indicates the national unemployment rate is at 26.7% (CoJ 28.2%) with more than 50% being unemployed female youth. In pursuit to reduce high levels of unemployment rate CoJ has targeted to achieve 5% economic growth by 2021 in order to create jobs. In line with the City’s commitment of supporting SMMEs, JW will continue to implement various programmes that are geared toward job creation and SMME development and empowerment.

In its endeavour to reduce unemployment within CoJ, JW will continue with the Learnership Contractor Development Programme in 2018/19. The programme intends to capacitate local SMMEs to achieve CIDB grading 4 by end of June 2019. The programme is currently in its second phase and it is anticipated that upon completion trained contractors will assist the City in the roll-out of the Pipe Replacement Programme.

JW intends to commence with the second intake and targeting a total of 35 learner contractors to be trained over three-year period upon the completion of phase 3 of current the Vukuphile Learnership Contractor Development Programme.

Other programmes identified include Repairs and Maintenance of infrastructures with more focus in townships. The programme intends to use local SMMEs in delivering services within the City.

As an entity of the CoJ, JW will ensure maximum participation of youth, women and people with disabilities (PWD) in the Job Creation Programme in order to transform the economic and social standing of the City community. In the 2018/19 financial year, JW has planned to support a total of 90 SMMEs through rolling out of infrastructure projects. To further boost the development of SMMEs, JW will also include measures that require user departments to implement the following initiatives:(i) to set aside at least 30% of budgets for SMME procurement, (ii) to unbundle large projects to suit SMME CIDB grading and capacity in particular instances; and (iii) to encourage larger businesses not only to subcontract but also form partnerships with SMMEs that will result in transfer of

skills and improve their capacity and expertise.


26

Tables 14, 15 and 16 below detail the number of SMMEs to be supported and number of jobs to be created as a result of the implementation of the various programmes (i.e. pipe renewal, installation of basic services, water demand management amongst others).

Table 14: Job Creation Plan -2018/19

Job Creation Year One Outputs (2018/19)

Programme Name No. of Entities

Entities owned by

Youth

Entities owned by Women

No.of Jobs

Capex Budget (R’000)

Opex Budget(R’000)

Region

Vukuphile Learnership Contractor Development

50 25 20 1 071 150 000 - All

O&M 6 3 2 175 - 8 900 A,D,E and G

Installation of Basic Services

6 3 2 75 30 000 22 500 All

Pipe renewal 20 10 8 626 125 000

Water Demand Management

8 4 3 100 80 000 - D,G

ToTal BuDGET 90 45 35 2 022 385 000 31 400

Table 15: Job Creation Plan 2019/20

Job Creation Year Two Outputs (2019/20)


Entities owned by

Youth


No.of Jobs


Opex Budget (R’000)

Region

Pipe Renewal 30 14 16 1 703 339 000 - All

O&M 6 3 2 450 - 11 100 A,D,E and G


4 2 2 171 20 000 30 000 All


20 10 8 465 125 000 - G

ToTal 60 29 28 2 789 484 000 41 100

Table 16: Job Creation Plan 2020/21

Job Creation Year Three Outputs (2020/21)


Entities owned by

Youth


No.of Jobs


Opex Budget (R’000)

Region

Pipe Renewal 30 14 16 1 427 353 000 - All

O&M 6 3 2 180 - 5 100 A,D,E and G


4 2 2 200 27 500 37 500 All


20 10 8 150 40 000 - G

ToTal 60 33 26 1 957 420 500 42 600


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4.2 Strategic Goal 2: Deliver water and sanitation services of good quality that is accessible, reliable and efficient in an environmentally responsible/ sustainable way

STraTEGiC Goal 2

Priority 3: Create a culture of enhanced service delivery with pride

Priority 6: Create a City that responds to the needs of citizens, customers, stakeholders and businesses

Priority 9: Preserve our resources for future generations

Diphetogo - Game Changers: Jobs, housing and infrastructure

Informal Settlements Upgrade Programme

This programme is aimed at improving service delivery through the upgrading of level of service from nominal service to level service 1 where water in the form of communal standpipes and sanitation in the form of Ventilated Improved Pit-latrines (VIPs), waterborne toilets and ablution blocks, is provided. The programme also provides an opportunity for job creation during project implementation.

JW will use basic services programme in creating jobs and improve the livelihood of the community living in informal settlements. JW intend to empower local communities in the roll-out of both basic water and sanitation services through the appointment of local labour to install communal stand pipes, VIPs and communal ablution blocks. It is anticipated that 100 jobs will be created.

Provision of Basic Service – Water

Basic water service in informal settlements would be provided to 154 328 of the 183 895 HH with a coverage of 83.89% by the end of 2017/18. This means that the remaining 29 567 HH will continue to receive water services at nominal service (water tankers) and require to be upgraded to basic service level in the subsequent years. The plan for 2018/19 is to provide access to basic water to 5 714 HH thereby increasing the coverage to 160 042 equivalent to 87.03% in informal settlements.

In 2019/20, JW plans to upgrade 10 933 HH to basic service level and will result in coverage being increased to 170 975 which is equivalent to 92.97% in informal settlements. In 2020/21, the aim is to upgrade 12 920 HH to basic service level, which will result in coverage being increased to 183 895 which is equivalent to 100% in informal settlements.

Provision of Basic Service – Sanitation

Basic sanitation service in informal settlements would be provided to 71 616 of the 183 895 HH equivalents with a coverage of 38.94% by end of 2017/18. The balance of 112 279 HH (backlog) will still be provided sanitation at a nominal service level (chemical toilets) and will be upgraded to basic service level in subsequent years. During 2018/19, an additional 3 214 HH will be upgraded to basic service level which will result in coverage being increased to 74 830 which is equivalent to 40.69% in informal settlement. In 2019/20, the plan is to upgrade 4 285 HH to basic service level and this will result in the coverage being increased to 79 115 which is equivalent to 43.03% in informal settlements. By 2020/21, the coverage will be at 45.77% with 5 053 HH additional provided with access to basic sanitation in informal settlements. This will result in an increase in coverage to 84 168 HH.

The budget has been increased to accelerate the provision of the Basic Sanitation Programme. A total of 55 149 HH cannot be serviced; however, partnerships with CoJ Housing will be established to address some of the challenges especially congestions and ground water conditions through re-blocking of informal settlements and further the alignment of basic services roll-out to housing developments. Alternative sanitation technologies will also be explored to determine those that are suitable for areas with geotechnical challenges.

Figure 9 below outlines the provision of Basic Water Programme in support of the pro-poor development city priority. It also incorporates the National Outcome, the IDP programme as well as related GDS outputs and outcomes, including the KPIs.

JOHAN

NESBU


iphetogo BUSIN

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28

Figure 9: Provision of Basic Water Services



GDS outcome A resilient, liveable, sustainable urban environment – underpinned by infrastructures supportive of a low carbon economy


KPi % access to adequate water services

Baseline 82.68% informal households with access to water at minimum LoS197.84% City Wide households with access to water at minimum LoS1



Target 2018/19 FY

Target 2019/20 FY

Target 2020/21 FY

83.89% informal households with access to water at minimum LoS1




100% informal households with access to water at minimum LoS1

98.01% City Wide households with access to water at minimum LoS12 290 HH

98.01% City Wide households with access to water at minimum Los1 – 2 290 HH

98.38% City Wide households access to adequate water at minimum LoS1- 5 714 HH

99.12% access to adequate water services (City Wide)10 933 HH

100% access to adequate water services (City Wide)LoS1- 12 920 HH

Programme R’000

Opex/CapexBudget

OriginalBudget

2017/18


2017/18

IndicativeBudget

2018/19

Change DraftBudget

2018/19

DraftBudget

2019/20

DraftBudget

2020/21

LeadCluster


Installation of basic water services in informal settlements within the CoJ

Capex 10,000 - 10,000 30,000 - 30,000 40,555 51,060 EISD JW

JOHAN

NESBU


iphetogo BUSIN

ESS PLAN

29

Figure10 below outlines the provision of the Basic Sanitation Programme in support of the pro-poor development mayoral priority. It also incorporates the National Outcome, the IDP programme as well as related GDS outputs and outcomes, including the KPIs.

Figure 10: Provision of Basic Sanitation Services



GDS outcome A resilient, liveable, sustainable urban environment – underpinned by infrastructures supportive of a low carbon economy


KPi % access to adequate sanitation services

Baseline 37.72% informal households with access to sanitation at minimum LoS192.24% City Wide households with access to sanitation at minimum LoS1



Target 2018/19 FY

Target 2019/20 FY

Target 2020/21 FY

38.94% informal households with access to sanitation at minimum LoS1





92.40% City Wide households with access to sanitation at minimum LoS1 – 2 240 HH





Programme R’000

Opex/CapexBudget

OriginalBudget

2017/18


2017/18

IndicativeBudget

2018/19

Change DraftBudget

2018/19

DraftBudget

2019/20

DraftBudget

2020/21

LeadCluster


Installation of basic sanitation services in informal settlements within the CoJ

Opex 22,000 - 22,000 45,000 - 45,000 60,000 75,000 EISD JW


30

4.3 Strategic Goal 3: Improve customer and stakeholder satisfaction

STraTEGiC Goal 3

Priority 3: Create a culture of enhanced service delivery with pride



Stakeholder Relations and Communication

JW as the municipal water and sanitation provider in the CoJ should never be the reason for bad customer experiences. Improving customer experience across all channels remains a priority for the company. A multi-channel customer service approach will benefit customers to receive a quick, efficient and above all consistent service. Furthermore, through extensive stakeholder engagement, JW will endeavour to ensure that we minimise community uprisings and project implementation delays.

The 2016/17 Customer Satisfaction Survey has indicated that generally, customers are satisfied with the quality and uninterrupted supply of water. Furthermore, 78% of our stakeholders also said that they would not consider switching to another service provider should there be an option.

The most lowly rated aspect of JW services was communication and response to problems followed by meter reading and water outages. Other areas requiring attention are around the Call Centre, fault reporting services and turn-around times when queries have been logged. Our customers and stakeholders are saying communication was not adequate especially regarding interruption of water services. Largely satisfaction through a customer satisfaction survey is high across segments based on the water quality and sanitation services, constant and uninterrupted water supply and technical staff doing a good job despite the prolonged turnaround times as reported in 2016/17. Faulty reporting and wastewater management had the lowest ratings while the highest were observed with customer education campaign and JW website. There was a general increase in ratings for all the regions in the 2016/17 survey compared to 2015/16.

Overall an inclusive satisfaction score of 69% in 2016/17 remained stagnant compared to the same 69% achieved in the 2015/16. Most of the HH and businesses scored JW above 70% which indicates most of the respondents are satisfied with water and sanitation services across the City. In the 2018/19 financial year, JW will give particular attention to those operational areas that create bad customer experiences. For instance, about 84% of stakeholders were satisfied with the extent to which JW was meeting its mandate, giving a 6% decline from last year’s 90% observed rating.

To ensure maximum customer and stakeholder satisfaction for the 2018/19 financial year, JW will endeavour to improve the following services:

Frequent service interruption

Thirty-five percent of business and corporate customers are not satisfied with frequent service interruptions that have a negative impact on their operations.

Planned intervention: » JW has embarked on a multi-year Pipe Replacement Programme that will have a positive impact in reducing the number of bursts across the City.

» JW will continue to inform affected customers and business timeously about planned and unplanned service disruptions to minimise interruptions and enable customers to plan ahead.

» JW will continue with the implementation of its operation and maintenance plans that will focus on preventative maintenance. This will reduce the bursts and blockages in its networks.


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Slow response to service interruptions

Thirty-one percent of customers think JW takes long to attend to their problems but they will make sure that the problem is dealt with ultimately.

Planned intervention: » The company will persist with its productivity project to have six jobs per day per water team and five jobs per day per sewer team. This has already resulted in a 26% increase in water productivity, and a 28% increase in sewer productivity year on year.

» JW will re-emphasise the turnaround times to all clients and ensure continuous updates.

Meter readings/Incorrect bill

The billing system continues to be a concern with 57% of our customers complaining of estimations, inaccurate bills, over charging, interest on bills and being charged on meters that do not belong to them.

Planned intervention: » New meter reading devices will be procured to minimise human errors. Amongst others, the specification for the new device includes capability to take pictures and Global Positioning System functionality.

» Meter reading validations will be done on site to confirm correctness and reasonability of the actual readings.

Call Centre

Twenty-six percent of clients said that the Call Centre was not helpful at all.

Planned intervention: » JW will engage with the CoJ Call Centre team to increase their knowledge of water and sanitation services in the City. » The revision of the protocol on the sharing of information between the JW and the CoJ will be updated annually.

Communication

Forty percent of JW customers are not impressed with the communication between themselves and JW. Some stated that communication was non-existent; especially when it comes to interruption of water services. They said they are not notified in this regard and their operations are severely affected. They also hardly receive any feedback on issues they have raised with the company. JW uses SMS alerts, social media and online/website postings to inform customers of service interruptions.

Planned intervention: » The company will embark on a city-wide campaign for more customers to subscribe to its SMS alerts and follow updates on social media. This will enable improved communication on planned and unplanned service disruptions.

» Regular engagements with stakeholders across different segments will be increased to inform, educate and obtain buy-in. » Targeted public education on the correct use of water, sewer infrastructure and payment of services and the availability of the Extended Social Package for indigent customers will be enhanced.

» Stakeholder Forums will be used to inform and educate community members about water conservation and proper use of sewer infrastructure.

JW has a robust stakeholder engagement programme to forge sustainable partnerships with external stakeholders.


32

Table 17 below is a high-level breakdown of the stakeholder segmentation for the company and planned engagement strategies.

Table 17: Stakeholder Segmentation

Stakeholder What matters to them?

What concerns them? (Risks)

How does JW respond to their

concerns?

How does JW communicate with

them?Customers » Recognition/

affirmation/Valued » Dignity » 24/7 access » Quality services – access, safety, reliability, affordability

» Responsive JW (seen) » Batho Pele » Organisational excellence – correct statements, effective customer service and problem resolved first time.

» Cost of services » Perceived lack of quality of water

» Sanitation/health » Customer » experience – service interruptions, lack of consultation, lack of information, smart meters imposed, unprofessionalism of frontline staff

» Frontline staff training » Education and awareness campaigns

» Improve alerts of interruptions

» Correct meter readings

» Proper Reinstatement

» Unmediated engagement

» Social media » SMS gateway » Out-of-home media » Own media » Electronic media » Broadcast media » Multi –channel distribution

» Councillors

Employees and Trade unions

» Job security » Clear vision/direction » Conditions of service » Recognition/affirmation/valued

» Fairness » Opinions count » Two-way communication

» Responsive JW » Brand Ambassadors

» Gap between executive management and junior levels

» Information gatekeeping

» New technology » Increased cost of living

» Inconsistent application of Performance Assessments

» Communicate decisions of Top Management

» Quarterly MD engagement with staff

» Mandatory quarterly business units and staff meetings

» Scheduled meetings with unions

» Information on intranet

» Include unions on intranet


» Internal social media network

» Incentives/recognition

» Electronic and print media

» Push notifications

Suppliers and Service Providers

» Realistic Terms of Reference /Specifications

» Fair competition » Transparent procurement procedures

» Cash flow

» Delayed payment » Non-payment » Changes in contract price

» Variance orders » Ineffective dispute resolution

» Termination of contracts

» B-BBEE compliance

» Communicate track record

» Strengthen dispute unlocking mechanism

» Company procedures and policies


» Correspondence » Project update meetings

» Emails » Website


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Stakeholder What matters to them?

What concerns them? (Risks)

How does JW respond to their

concerns?

How does JW communicate with

them?Communities and Community leaders

» Recognition » Equality » Batho Pele » Agenda must be accommodated

» Responsive JW » Brand Ambassadors

» Lack of Batho Pele » Safety » Employment opportunities

» Subcontracting opportunities

» Action list » Safety protocol » Complaints procedure and access

» Feedback results of above

» Emails » Subcontracting is included on all contracts if feasible


» Online media » Traditional methods e.g. Public Meetings

» Weekly telephone calls to Ward Councillors

» Electronic and social media

» Broadcast media » SMS notifications » Push notifications » Loud-hailing

Government and regulatory Bodies

» Provision of Services » Compliance » Consultation » Information Sharing » Disaster/Crisis Management Plan

» Policy compliance

» Non-compliance to standards

» Non-compliance in finance and administration legislation and policy

» Lack of information sharing

» Interventions » Success of interventions

» Access information

» Compliance Reports » Traditional methods » Presentations » Focus and professional group discussions

media » Reliable source » Information integrity » Effective media liaison » Sufficient data » Human angle » Access to JW spokesperson

» Access » Content integrity » Lack of information

» Timeous news alerts » Check/ verify » Newsroom visits » Incidental media briefings

» Educational tours


» Online media » Social media » Email updates » Telephone calls » Media briefings » Press statements

Special interest and Peer Groups

» Access to information » Information sharing » Recognition » Brand Ambassadors

» Lack of credible information

» Partnerships

» Access channels » JW agenda/ opportunities for partnership


» Online media » Traditional methods » Targeted Stakeholder Forums


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4.4 Strategic Goal 4: Enhance sound financial management, sustainability and clean governance

Strategic goal 4

Priority 5: Create an honest and transparent City that fights corruption

Priority 7: Enhance our financial sustainability

Diphetogo - game changer: Finance

Water Revenue Programme

Revenue Management

The revenue function, which includes the customer call centre, billing and invoicing of customers and collection of monies from customers is outsourced to CoJ’s Revenue and Customer Relations Management Department. JW has a team of 13 employees who are assisting with credit control of platinum customers.

Over the past few years, JW’s performance regarding revenue, net profit and cash has been below budgeted levels. This is mainly due to difficult economic conditions. In order to improve financial performance, JW established revenue and metering project. The objectives of the project are to enhance revenue by identifying missing customers, ensuring that all customers are billed at the correct tariff and that all customers are billed monthly for the services rendered.

Financial Management

JW has an approved delegation of authority matrix to ensure that approval of transactions and activities is done at an appropriate level. These delegations also ensure that there is segregation of duties for incompatible functions. In addition, to make procurement more transparent, JW has started performing public adjudication of tenders.

Financial Sustainability

Financial sustainability is critical to ensure that JW delivers water and sanitation services to the residents of CoJ. Over a number of years, JW has had challenges regarding its liquidity, leading to a decrease in infrastructure investment. The detailed financial plan is included in Chapter 7 of this document. Table 18 below represents the critical financial sustainability ratios that the Company aims to achieve.

table 18: critical financial sustainability ratios

2016/2017 2017/2018 2018/2019

June 2017 November 2017 June 2018 June 2019

current ratio 0.65 0.7 1.01 0.99

Solvency ratio 1.93 2.00 2.4 2.9

cash cover Days 17.1 6.63 17.11 26.18

Financial sustainability focus areas

Figure 11 highlights the Revenue and Enhancement Focus Areas that JW will undertake to maintain and improve its financial sustainability. These areas are detailed further below.


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Figure 11: revenue Protection and Enhancement Focus areas

Investigate Unbilled/Unmetered Consumption

As a measure of curbing commercial losses and enhancing revenue: » Commercial loss will develop a review process to ensure that correct tariffs are applied to all stands visited during the revenue enhancement project.

» Improve customer updates process on SAP ISU upon survey and analysis to reduce the identification-to-invoice period. » Implement a follow-up process to ensure metering of all stands that were identified as unmetered during revenue enhancement project.

» The use of the municipal courts system is expected to increase compliance after identifying the stands that are not complying. » Metering database is expected to increase by at least 1.5%

Revenue Generation

Meter Reading will focus on revenue completeness by: » Developing a metering database to manage the movement of meters within the billing system. » Developing systematic monitoring of revenue movements through improved technology and innovative analytical methods. » Employing latest technology to ensure effectiveness in meter reading and sustainability of high read ratios. » Maintaining the 95% meter reading ratio to ensure revenue realisation and improved payment levels. » Ensuring effective device management and seamless meter reading-to-billing process. » Ensuring billing completeness of both water and sewer. » Implementing automated revenue analysis systems to improve reconciliations.

rEvENuE ProTECTioN

aND ENHaNCEmENT

Investigate Unbilled/

Unmetered Consumption

Develop Metering

Database and Revenue Analysis

Systems Implement Prepayment

Technology and Systems that

Support Revenue Enhancement

Ensure Effective Bylaw Enforcement

Processes

Improve Technology to Manage Large

Water User Revenue


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Improve Technology to manage Large Water User revenue

The company will put special focus on the Large Water User (LWU) customer base as high revenue generators for JW by: » Directing efforts to streamline LWU population by employing the latest metering technology in the market to monitor consumption. » Implementing Advance Metering Infrastructure (AMI) technology to improve consumption measurement and billing. » Monitoring completeness of LWU population to ensure accurate billing monthly. » Developing relationships with LWU customer base and implementing a stakeholder management process to monitor queries and ensure immediate resolution.

» Measuring LWU debtor days through focused credit control processes.

Implement Prepayment Technology and Systems that support revenue enhancement

Prepayment database will be improved and sales monitored by: » Improving prepayment database in order to accurately monitor consumption patterns. » Rolling out STS compliant prepayment system to at least 5 000 customers. » Alignment of prepayment water tariff to RW tariff. » Increasing the number of vending points by 20% to improve sales. » Improving reconciliations to minimise risks with both 3rd party vending and customer purchases. » Aligning illegal connections investigations process to the vending process to proactively pre-empt illegal connections and to improve purchasing customers.

Ensure effective by-law enforcement processes

Improve the effectiveness of by-law enforcement activities by: » Ensuring that by-law enforcement process is aligned and prioritised according to areas of risk for both conventional and prepaid customers.

» Making use of the municipal courts system to enhance illegal connections management process. » Improving cut-offs to 80% of confirmed illegal connections. » Improving the legalisation of illegal connections within CoJ to realise revenue from by-law enforcement initiatives.

Clean Governance

The Board of Directors and Executive Management recognise and are committed to the principles of openness, integrity and accountability advocated by the King IV Code on Corporate Governance. Through this process, the shareholder and other stakeholders will derive assurance that JW is being ethically managed according to prudently determined risk parameters in compliance with generally accepted corporate practices.

JW has entrenched its risk management reviews and reporting. Compliance assessments are conducted in terms of the Companies Act of 2008 (COACT), the Municipal Systems Act of 2000 (MSA) and the Municipal Finance Management Act of 2003 (MFMA). Annual Board assessments and evaluations are conducted and an annual report for the previous year completed in accordance with the terms of Section 121 of the MFMA. All of the above asserts to give assurance that JW is on a good footing.

Furthermore, the CoJ’s Governance Framework assists the City as a group to better understand the governance structure and principles required to ensure effectiveness and accountability. The framework also aims to improve the capacity and capability of the Board of Directors and Executive Management to effectively manage JW and efficiently account to the CoJ as sole shareholder.

The Board and Management recognise that JW has a mandate to deliver services derived from a political structure and aligned to the CoJ strategy.


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Even though JW received unqualified audit opinions from 2013/14 to 2016/17 financial years it has nevertheless taken the findings in the Auditor General South Africa (AGSA) management letter seriously by implementing mitigating controls to improve the level of the deficiencies, the resolution rate of the findings and aiming to achieve a clean audit opinion. The outcomes of the findings reflect an improvement in the control environment component of the business. The resolution of findings is a matter of course overseen by the Audit Committee on a quarterly basis.

The Board provides effective leadership based on a principled foundation and JW subscribes to high ethical standards. Responsible leadership, characterised by the values of responsibility, accountability, fairness and transparency, has been a defining characteristic of JW since the Company’s establishment in November 2000.

The fundamental objective has always been to do business ethically while building a sustainable company that recognises the short- and long-term impact of its activities on the economy, society and the environment. In its deliberations, decisions and actions, the Board is sensitive to the legitimate interests and expectations of JW’s stakeholders.

The Board and Management recognise that JW is formed under a political structure. As such, it has a social and moral standing in society with all the attendant responsibilities. The Board is therefore responsible for ensuring that JW protects, enhances and invests in the wellbeing of the economic, social, and natural environment, and to pursue its activities within the limits of social, political and environmental responsibilities outlined in international conventions on human rights.

The Board provides quarterly and annual reports on its performance and service delivery to the parent municipality (i.e. CoJ) as prescribed in the SDA, the MFMA and MSA.

JW has a unitary Board, which consists of a minority of executives and a majority of non-executive directors. The Board is chaired by a non-executive director. The Board meets regularly (at least quarterly) and retains full control of JW. It remains accountable to CoJ as its single shareholder, through the Company, its stakeholders, and the citizens of Johannesburg.

In order to enhance good governance, JW will minimise and reduce deviation purchases, avoid irregular and unauthorised expenditure and revitalise the bid committee processes to improve cycle times. This will be achieved through having framework contract, using transversal contracts from National Treasury (NT) and implementation of a visible project management tool to monitor and manage bid committee processes.

System of Internal Controls

JW has employed the services of Internal Auditing as per the MFMA Section 165 (1, 2) requirements. The Internal Audit Department (IAD) is an independent, objective assurance and consulting activity designed to add value and improve JW’s operations. The IAD assists JW accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

IAD adds value in ensuring that the JW to accomplish its objectives by: » Developing and implementing a risk-based three-years rolling strategic audit plan ending 30 June 2020 which is approved by the Board.

» Annually preparing an assessment report expressing an opinion (Statement of Internal Control) on the adequacy and effectiveness of the system of internal controls on issues of deficiencies not addressed or resolved by management on a quarterly basis. The report will form the basis of the Audit Committee Report.

» Applying the principles Combined Assurance by integrating and aligning assurance processes within JW to maximise risk and governance oversight and control efficiencies, and optimise overall assurance to the Board, considering the Company’s risk appetite.

» Providing and ensuring that both the unresolved IAD and the AGSA findings are prioritised as part of the plan and through a finding register. This will assist management in improving on the finding resolution rate.


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The resolution rate for IAD findings for the 2016/17 financial year was at 65% and AGSA was at 35%. The low resolution rate of 35% on AGSA findings was due to lack of sampling to test the controls in the Supply Chain Management (SCM) value chain. The tender process was put on hold for five months (March to July 2017) to work on mitigating the SCM control deficiencies identified. IAD will continue to follow up on unresolved findings to ensure management resolution rate improves.

Anti-Fraud and Corruption

JW has prioritised Fraud Risk Management as per the MFMA. This environment is zero tolerant to acts of fraud and corrupt activities. This means that JW will investigate any individual, a group, or a company from internal or external, committing or trying to commit fraud or corrupt activities through its systems, officials or clients with everything it has even to the court of law.

Internal Auditing, Risk Management, Internal Controls and Tip-offs Anonymous Hotline assist in detecting fraudulent and corrupt activities. All reported cases internally and externally are registered, monitored and investigated by Group Forensic Investigation Services (GFIS) to ensure that they are resolved and people are held accountable.

During the course of 2016/17, the forensic investigation section was seconded to CoJ- GFIS Department. As a result, there are minimal activities performed by the company in relation to this function. All forensic investigations that arise from time to time are referred to GFIS.


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4.5 Strategic Goal 5: Use of technology for effective and efficient operations

STraTEGiC Goal 5 Priority 8: Encourage innovation and efficiency through the Smart City Programme

The information and communications technology (ICT) objectives for 2018/19 represent an important step forward in the goal to transform ICT and the services it supports to the users and business of JW. Users’ and business expectations are changing and ICT has to adapt to meet these expectations. The future of JW’s ICT is not just about technology; it is also about how JW uses information and technology to deliver better services in a constantly changing environment. In addition, a number of processes namely metering (Smart Water Meters), meter reading (hand-held devices), performance and succession management (SAP module) will be rolled out in order to leverage the use of technology.

Amidst the growth and proliferation in the use of technology, however; there is an ever-increasing need to provide assurance that JW’s ICT applications and systems are secure and that private and confidential information is safe. The system of assurance must be strengthened to manage information and technology risks, and the quality of JW’s ICT-enabled projects and services. This must apply across the spectrum of investment decision making, development, operations, benefits tracking, replacement and decommissioning.

In addition to identifying completely new initiatives, the objectives include a mix of actions that have already started, some that have not yet commenced but have committed resources, and some existing initiatives that will require an increase in scope to meet the transformation goals.

The technology deliverables for 2018/19 are depicted in figure 12 below.

Figure 12: Technology Deliverables

WorKForCE oPTimiSaTioN

PorTFolio aND ProJECT

maNaGEmENT

ClouD ComPuTiNG

BuSiNESS aNalYTiCS


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Workforce Optimisation

The effective and efficient scheduling of work orders is key in the day-to-day operations of JW to ensure the timeous delivery of quality services to the citizens of the CoJ. The goal is to provide a technology platform that manages and optimises the service delivery value chain end-to-end – from the time a customer engages with JW through to fulfilment of a service request. At the heart of the solution is the ability to dynamically and intelligently manage the value chain from end-to-end. It will track all the activities prior to, during, and after the service to optimise performance at the moment of customer/asset engagement. Throughout the value-chain customers are informed of their service request activities at every event.

Deliverable

The solution will dovetail into the City’s Maru-A-Jozi Smart City Project, which enables citizens to log queries and problems for municipal services.

Business Analytics

The primary objective of this deliverable is to unlock the value of data and information. Under the banner of Business Analytics, the entity is making significant investment in business intelligence tools to design and deliver new reporting services to support operations and optimise decision-making.

Business Analytics gives the power of insights to uncover significant events and identify trends in order to adapt quickly to ever-changing business dynamics. Delivering the right information to the right people in the right format and at the right time is the significant aspect of real-time business intelligence. It is the process of delivering information about business operations as they occur with minimum latency.

The project will leverage from the existing technology platform and software installation base which will reduce delivery times and costs. The long-term strategy is to create a platform that can scale up and out to become the standard technology platform for business reporting.

Deliverable

There is a commitment to deliver a management dashboard for every business unit with a view to have four integrated dashboards in place. The project will include training to up-skill internal staff with the aim to become a self-sufficient team to maintain and support the technology and business reporting needs.

Cloud Computing

Cloud Computing can be defined as an information technology paradigm; a model for enabling ubiquitous access to shared pools of configurable resources, which can be rapidly provisioned with minimal management effort, often over the internet. Cloud computing allows users and enterprises with various computing capabilities to store and process data either in a privately-owned cloud, or on a third-party server located in a data centre, thus making data-accessing mechanisms more efficient and reliable.

Over and above the technology and financial benefits, the cloud model will be embraced as a catalyst to transform ICT from a keeping the lights on operating outfit to that of an information broker. ICT services such as email and storage are becoming more and more commoditised through cloud technology freeing up resources and capital budget. The three key benefits of Cloud Computing are captured in figure 13 below:


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Figure 13: Key Benefits of Cloud Computing

Deliverable

The objective for the 2018/19 is to move 25-30% of ICT applications into the cloud.

Portfolio and Project Management

Project Portfolio Management (PPM) is the centralised management of the processes, methods, and technologies used by project managers and Project Management Offices (PMOs) to analyse and collectively manage current or proposed projects based on numerous key characteristics. The objectives of PPM are to determine the optimal resource mix for delivery and to schedule activities to best achieve the company’s operational and financial goals, while honouring constraints imposed by customers, strategic objectives, or external real-world factors.

3Scalability Scales on demand to support

fluctuating workloads.

3Storage options Different storage offerings

depending on security needs.

3Choice of service Choice of cloud services

depending on application and technology requirements.

FlExiBiliTY

3accessibility Cloud-based applications and

data are accessible from virtually any internet connected device.

3Provisioning Applications and systems can

be provisioned very quickly therefore enabling business to realise quicker returns and value.

3Data security Hardware failures do not result in

data loss because of networked backups.

3Savings on equipment Cloud computing uses remote

resources, freeing up capital budget from technology refresh.

3Pay structure A utility pay structure means you

only pay for the resources that you use.

EFFiCiENCY

3Streamlined work Cloud service providers manage

underlying infrastructure, enabling the entity to focus on other priority.

3regular updates Applications and system are

regularly updated providing users with the latest technology, protected against the latest software vulnerabilities and freeing up IT resources time.

3Collaboration Any user with internet access can

access information and systems at any time with device.

valuE


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Figure 14: Portfolio and Project management

Better Decision Making

To make good decisions you need good data, hence visibility is crucial, both from a strategic, top-down perspective and from a tactical bottoms-up perspective. PPM provides visibility into which projects are on time, which ones are behind schedule and which projects may impact the delivery of other projects.

Minimise Risk

There are several categories of risks, including financial, governance, resource utilisation and misdirected efforts. On the financial side, good project management policies to calculate the benefits against the cost of cancelling a poor performing project, as well as identify projects that are not contributing to JW’s objectives. As for reducing governance risk, the goal is to build an accountability framework that ensures that the right level of compliance is followed through every project lifecycle.

Maximise Resources

The greater degree of visibility, both on the macro and micro level, makes it possible to gain improved control over projects. A centralised approach allows one to reduce project costs, primarily though the reduction or elimination of duplicate effort. With a resources database one can manage resource demands, allocations and capability.

Prove the Value to Stakeholders

An effective PMO and PPM strategy allows relevant stakeholders to have access to the project status and results/data they need. The net result of this greater degree of transparency is that stakeholders gain a much greater comfort level and appreciation in terms of project execution and results.

Enable Repeatable Success

The essence of an effective PMO is providing a process framework and technology infrastructure that allows one to continuously meet business objectives. Repeatable success is gained by establishing best practices and proven project management methodologies and enforcing their use throughout the organisation. PPM ensures that an organisation has a single version of the truth to enforce consistency in evaluating past projects and guiding the prioritisation and execution of future projects.

Deliverable

To implement a PPM software solution to manage the company’s capital investment projects.

init

iate

aggregate

manage and monitor the portfolio and programmesPORTFOLIO LEVEL

Project management and executionPROJECT LEVEL

Core enterprise processes and activitiesOPERATIONS LEVEL

1

2

3

Portfolio management Portfolio analytics

logistics resources Financial data

Project management


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4.6 Strategic Goal 6: Invest in our staff to sustain optimal performance and a service-focused culture with committed people

STraTEGiC Goal 6 Priority 3: Create a culture of enhanced service delivery with pride

Capacity Building

Analysis of the capacity requirements of JW takes cognisance of training needs, attrition due to resignations, retention of scarce skills, retirements, employee wellbeing and addressing changing needs in the staff complement due to growth and restructuring. Plans for the next five years, including the 2017/18 financial year, are aimed at addressing the above goal.

Capacity building in terms of skills development is directly linked to the skills needs that exist in JW and that are projected for the next five years. JW conducts a Skills Audit once every five years, in order to identify the skills and knowledge that the company requires, as well as the skills and knowledge that the company currently has. Training Needs Analysis is conducted annually to identify the training needs at employee, departmental or company level in order to help JW to perform effectively. This investment in employee skills development ensures a culture of lifelong learning and quality service delivery through committed people.

In its endeavours to achieve optimal performance and remain service focused, the culture is an important factor and regular assessments of job satisfaction levels are carried out. The last assessment was conducted in the 2016/17 financial year and the implementation plans for the improvement areas was rolled out in 2017/18. Company performance is an important factor and the contribution of employees is critical.

Annual performance plans are agreed with employees and are based on KPIs as outlined in the Balanced Scorecard (BSC).

Skills Development

JW makes available a training budget equal to an average of 1.8% of total annual payroll. This is significantly more than what is prescribed in the Skills Development Levies Act (SDLA) which is 1% of annual payroll. At present JW has a number of initiatives being implemented and planned for internal staff which includes the following and are mainly focused on Skills Programmes, Learnerships and Full Qualifications.

The apprenticeship programme for plumbers is currently in its third year and will be completed in June 2019. Learnerships for Water Reticulation and Water and Wastewater Treatment Works will be implemented from February 2018 for National Qualifications Framework (NQF) Levels 1 - 5. Recognition of Prior Learning (RPL) initiatives for technical and water treatment staff that have the requisite experience are successfully rolled out with a number of employees already qualified and additional programmes to be implemented. The Company has started with an Artisan Recognition of Prior Learning Programme (ARPL) for experienced workers in technical related trades. Employees will receive recognised Trade Certificates after successfully completing the ARPL Programme.

Thirty-three employees have recently completed their Adult Basic Education and Training (ABET) training in Numeracy and Literacy on Level 4. There are currently 76 employees actively enrolled for ABET Levels 1 – 4 in Numeracy and Literacy. This is a continuous programme.

JW also partners with the Sector Education and Training Authority (SETA) in a number of Social Responsibility Initiatives. These initiatives will be implemented dependent on funding and grants approved and received from various SETAs.


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Table 19 below indicates the Social Responsibility Projects being implemented by JW:

Table 19: Current Social responsibility Projects

SETA Total Value of SETA Funding

(R’000)

Target Group Details of Training Completion Date

The Energy and Water Sector Education and Training Authority (EWSETA)

2,370 15 Currently employed apprentices

Plumbing 30 June 2019

Two full-time bursaries for unemployed youth

Civil EngineeringVarious disciplines

30 June 2018

Local Government Sector Education and Training Authority (LGSETA)

3,100 60 Unemployed youth 15 Plumbing Learnerships

30 October 2020

45 Water and Wastewater treatment operators

30 September 2018

JW is committed and focused to develop current and future skills requirements of employees, but also provides learning opportunities to learners from previously disadvantaged communities. These interventions increase their portability within the company and marketability for jobs in industry outside the company.

JW is adopting a holistic approach towards Skills Development initiatives. Training interventions for 2017 to 2022 are categorised as Technical Training Programmes that comprises of Apprenticeships; Technical Learnerships; Technical Skills Programmes; Occupational Health and Safety (OHS) and Compliance Training and ARPL. The second category is the Non-Technical Training interventions which include ABET; Learnerships (non-technical related occupations); occupational directed skills programmes; soft skills programmes and RPL. The Company has a Subsidised Education System (SubEd) in place to assist employees to obtain approved qualifications through tertiary institutions.

Workshops and courses are specially arranged to ensure technicians, technologist and engineers are equipped with relevant and current knowledge and skills in the different engineering fields. Accumulation of Continuous Professional Development points ensures that they are able to perform optimally in their professions.

JW is also actively involved in the War on Leaks (WOL) Programme that was launched on 28 August 2015 in the Eastern Cape by the President of the Republic of South Africa. The programme has the following main objectives: » To reduce high levels of water losses and create awareness to the public on how to conserve and save water. » To train 15 000 artisans and plumbers over three-year period through repairing of leaks.

JW entered in to a Service Level Agreement (SLA) with RW (A DWS-appointed Implementing Agent for the WOL Programme) for a duration of five years (2015 - 2020). Unemployed learners who are part of this programme are deployed at various JW worksites to gain the necessary workplace exposure. A group of 60 have been successfully provided with experiential training. There are currently 33 apprentices deployed at bulk WWTW for 18 months starting March 2017 for work exposure.

Over the next five years, in terms of its social responsibility initiatives, JW aims to contribute skills development and incubation programmes for unemployed youth who will be recruited in areas in and around CoJ. These projects are identified by JW and funded by various SETAs. New projects will be embarked on after completion of the projects listed in table 19.

The training and development interventions will not only increase the overall competencies of employees and external learners, but will also provide a vehicle for the Company to have a steady skills pool to recruit from.


45

Apprentices are recruited within and outside JW and annual intake targets are determined by the projected need of artisans as well as available apprentice positions in the structure. A total of 15 apprentices can be trained per cycle based on the need. This project is continuous, to ensure a steady supply of artisans who are qualified and fit for purpose in terms of JW operational job requirements. JW will train apprentices in the following trades: » Plumbing » Electrical » Fitting » Turning » Diesel Mechanic » Welding » Instrument Mechanic » Bricklaying.

Employees with more than 4 years’ experience in trade-related jobs will be assisted to achieve artisan status through the ARPL Programme. JW intends to take about 20 employees per year through the ARPL process. The first group of up to 50 employees (general workers and operators) started with the ARPL process in 2017 and will complete in 2019.

Learnerships are focused on employees who need to achieve qualifications related to specific occupations and it also ensures that JW is in a position to meet the green drop requirements in terms of staff competency levels. The following Learnerships are offered: » Water and Wastewater Reticulation Services NQF Levels 1 – 4 » Wastewater Process Control NQF Levels 1 – 4.

Employees with more than four years’ experience in water-related occupations will be assisted to achieve the above qualifications through the RPL process. The Company intends to take about 15 employees through this process per year.

At lower levels, an ABET programme had been in place for a number of years. This programme will continue until JW has reached acceptable literacy and numeracy levels for all employees. Between 50 and 100 learners are planned to be enrolled for this programme over the next five years.

As part of JW’s capacity development initiatives, two programmes are in place to develop students and graduates, namely the internship and bursary schemes. The aim of these programmes is to develop skilled human resources in predominantly scarce skills to assist JW in achieving its core mandate of service delivery.

The bursary programme focuses predominantly on the field of civil engineering where students join JW as trainees after completion of their studies. The programme not only contributes towards youth empowerment and poverty alleviation but it also ensures that there is a pipeline of scarce skills being developed within JW. There are currently 19 bursars and the programme has been running since 2002 and all successful graduates have been employed in permanent positions. In fact, the bursary programme is a valuable source and pipeline for skills. To date 60 bursaries have been awarded and over 95% have successfully completed their studies and obtained employment in JW. There are 19 bursars in the 2017/18 financial year and 12 of these will be joining JW as trainees in the 2018/19 financial year, resulting in the recruitment of additional bursars to maintain the original number that can be accommodated. The bursary programme is ongoing and it is estimated that there will be, on average, 16 bursars at any given time over the long term, contributing to a skilled and capable workforce.

The internship programme is an enabling platform where unemployed graduates are provided with the opportunity to gain practical workplace experience and enhance their skills. While the intention of this programme is social responsibility, the unintended consequence is an additional pool of suitably qualified and experienced potential employees. The internship programme provides for at least 13 interns per year and has been running since 2003 with interns appointed on one year internships. To date 103 internships have been successfully completed. Whilst it is not the intention with the internship to create a skills pipeline for JW many interns do in fact get appointed on a permanent basis within JW. While the interns complete their


46

internships at various times depending on when they were recruited it is the intention to have at least 13 interns across the various disciplines in the 2018/19 financial year.

JW also partners with the National Research Foundation and the Department of Science and Technology to accommodate at least four interns annually in the field of science.

Committed Employees

Talent Management

retention of Scarce SkillsJW has an active retention strategy which aims to improve retention rates, particularly of scarce skills, while at the same time decreasing the associated costs of high turnover. Since the implementation of this strategy, staff turnover has decreased significantly with the target for both scarce skills and all staff turnover (97%) being consistently maintained over the past few years.

There are a number of programmes in place that cement the low turnover rate and encourage retention. These include the availability of career counselling, proper on-boarding and induction programmes as well as regular analysis of exits. In addition, an executive coaching programme has been in place since 2012 and a new service provider is in the process of being appointed. In terms of scarce skills, two specific programmes have been implemented, namely the Engineering Capacitation Programme and the Specialist Career Grade. Both programmes promote the professional development of engineers and scientists. JW has managed to build up its engineering capacity to 27 professionally registered engineers, technologists and technicians with the Engineering Council of South Africa. The long-term output of this programme is 34 registered professionals by the 2020/21 financial year.

Health and Safety

JW continues to be committed to protecting its employees, customers and the public from risks arising out of work related activities and as a result relates directly to the country’s constitution in providing a healthy and safe working environment for all.

One of JW’s basic tenets on continual improvement in OHS management and performance to prevent injuries and ill-health was confirmed with the attainment of a National Occupational Safety Association (NOSA) 4-star rating in the 2016/2017 financial year.

To ensure that JW stays competent and relevant in this health and safety world, tried-and-tested systems had to be religiously implemented. To date, JW has implemented the Environmental Management System (EMS) in terms of International Organisation for Standards (ISO) 14001:2004 requirements. In that area, JW is currently in the process of developing and amending guidelines, standards and procedures to be in alignment with the requirements of the EMS based on the new ISO 14001:2015 requirements. JW’s target for the 2018/19 financial year is to ensure alignment of the organisation’s ISO 14001:2004 with the enacted ISO 14001:2015 system, by conducting a Gap Analysis (with the view of preparing for Stage 1 and Stage 2 accreditation processes) in the 2018/19 financial year.

To achieve this, JW is currently involved in: » Developing and amending guidelines, standards and procedures to be followed. » Conducting Environmental Impact Assessments to identify the negative and positive environmental aspects and impacts associated with our activities.

» Managing contractors to ensure that all contractors appointed by JW comply with relevant environmental legislations. » Regular monitoring, assessment and evaluation of JW activities in order to identify gaps within the ambit of relevant legislations and implemented safety, health and environment management systems.

» Continuous awareness’s to instil a culture of environmental management in the organization.


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To continue on the path of continual improvement, JW has again set the Safety and Health target for the 2017/2018 at a 4-star rating level – allowing all those few sites that did not do well to catch up and those who performed well to improve on their overall percentage score and reduction in the Disabling Incident Frequency Rate– in preparation for the 5-star rating target set for the 2018/2019.

In readying JW for the year ahead, the following are being attended to: » Ensuring relevant Health and Safety appointments and delegations; » Following up on Health and Safety findings of the last audits; » Developing and amending guidelines, standards and procedures to be followed; » Environmental monitoring to identify the negative and positive environmental aspects and impacts associated with our activities; and

» The continuous creation of awareness to inculcate a culture of health, safety and environmental management in the company.

Recruitment

In an increasing competitive global market for limited skills it is critical that JW provide a comprehensive working environment that will attract, retain and motivate the right calibre of employees. Our recruitment process serves as the first stage in ensuring that JW provides quality service and sustainable optimal performance. Identifying and attracting suitable applicants depends on the effectiveness of our sourcing strategies. The job design system ensures that job profiles which are utilised to draw advertisement are able to attract the right candidates for the job. Optimising our talent sourcing and recruitment is therefore one of the top priorities.

Reducing the time taken to fill vacancies has also been prioritised and a target of 10 weeks has been set for the filling of a vacancy for the 2017/18. JW has thus far achieved 10.92 weeks’ average turnaround time for recruitment based on the 2016/17 assessment and this actual target will further be decreased by one week to reach a turnaround time of 10 weeks in 2017/2018 and ultimately seven weeks by 2021. To accelerate the filling of positions the standard operating procedure for recruitment has been reviewed to ensure that the timelines are specified and adhered to.

JW’s economic and financial circumstances and ability to fund the filling of vacancies continue to be the biggest threat to filling vacancies. The proposed re-integration of the municipal-owned entities to CoJ will have a slight impact in the filling of positions mostly those in support functions.

To date the JW has managed to fill funded vacancies within the requisite time period and even in the scarce skills categories although taking longer it has been possible to attract talent.

Employment Equity

JW acknowledges the need to develop a culture of diversity that goes beyond achieving the numbers through workforce representation. The society we service is very diverse and as such it is important to develop a diverse workforce to serve the community.

An Employment Equity (EE) Plan has been put in place to be effective as of 1 January 2018 for the next five years until 31 December 2022.

At present a target of 3.85% has been set for PWD for the financial year 2017/18. This target will increase to 3.87% by 2018/19. The target percentage of female representation will increase from 28.5% at present to 29.15% in 2018/19. The representation of females has achieved 28.33% to date and it is envisaged that by 30 June 2018 the actual representation would be above 28.5%.

The EE Plan for the period January 2018 until December 2022 provides for the following targets for the employment of Females and PWD:

Females: 34.43% by December 2022PWD: 4.02% by December 2022


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JW has managed to achieve representation of 3.77% for PWD and this compares well against the 2% target set by the Department of Labour. The challenge is that it gets more difficult to achieve the targets due to the lack of candidates presenting themselves for employment in the technical fields. However, JW has made sufficient progress with the elimination of barriers to ensure that it meets its targets over the next five years.

In support of the above, JW will be rolling out a structured approach to the employment of PWD to support the current recruitment efforts. As JW continues to employ more PWD it is imperative to sensitise JW employees and managers on disability awareness in order to ensure that the working environment is supportive and non-discriminatory to all employees. Members of the EE Committee have been trained on disability awareness and they will be conducting awareness sessions in their respective workplaces. JW places importance in ensuring that all our workplaces are accessible, as such from time to time an audit is conducted to identify the barriers and put in place mechanism to mitigate them.

In order to ensure that the JW is transformed, targets will be cascaded to departments as well. This will ensure that all departments are diversified. The EE Committee will continue to monitor EE and equitable employment practices within JW and advise departments accordingly.

Sustainable development is defined as development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Sustainable development calls for concerted efforts towards building an inclusive, sustainable and resilient future for people and planet. For sustainable development to be achieved, it is crucial to harmonise three core elements: economic growth, social inclusion and environmental protection. To this end, there must be promotion of sustainable, inclusive and equitable economic growth, creating greater opportunities for all, reducing inequalities, raising basic standards of living, fostering equitable social development and inclusion, and promoting integrated and sustainable management of natural resources and ecosystems.

On 25 September 2015 at the United Nations summit, countries including South Africa adopted a set of 17 Sustainable Development Goals (SDGs) to end poverty, protect the planet, and ensure prosperity for all as part of a new sustainable development agenda. They seek to build on the Millennium Development Goals and complete what they did not achieve, and they are integrated and indivisible and balance the three dimensions of sustainable development: the economic, social and environmental. It is important to note in a review of long-term strategic planning for the CoJ, that South Africa will be expected to deliver on these goals, targets and indicators, which in turn cascades down to municipalities in their focus on service delivery and sustainability. Each goal has specific targets to be achieved over the next 14 years. For the goals to be reached, everyone needs to do their part: governments, the private sector and civil society. It is against this backdrop that JW commits to conduct its business in a manner that support the attainment of the following 7 SDGs which are applicable to the nature of the business, namely;

Chapter 5:Sustainable Development Goals


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» Goal 5: Gender Equality » Goal 6: Clean Water and Sanitation » Goal 8: Decent Work and Economic Growth » Goal 9: Industry, Innovation and Infrastructure » Goal 11: Sustainable Cities and Communities » Goal 12: Responsible Consumption and Production » Goal 13: Climate Change

The following section discusses the Company responses to the aforementioned seven SDGs and the performance measured in table 20.

5.1 SDG 5: achieve gender equality and empower all women and girls

The Company aims to end all forms of discrimination against women through the implementation of the EE Plan. The objective of the plan is to provide advancement opportunities for members from designated groups, especially females and PWD who are suitably qualified by ensuring proportional representation in the occupational profiles of JW in line with set targets, this will ensure women’s full and effective participation and equal opportunities at all levels within the company.

5.2 SDG 6: ensure access to water and sanitation for all

The company will improve service delivery through the upgrading of level of service from nominal service to LoS 1 where water in the form of communal standpipes. In addition, VIPs as well as ablution blocks will be rolled out to achieve access to adequate and equitable sanitation and hygiene for all and end open defecation, paying special attention to the needs of those in vulnerable situations. The use of technology will be fast tracked in the sanitation space to implement alternative sanitation technologies.

JW will work towards improving river water quality by reducing pollution caused by blocked sewers, ablution blocks, minimising release of untreated wastewater at our WWTW and substantially increasing recycling treated effluent and safe reuse. Although potable water is provided by the bulk service provider, the company will ensure that the distribution thereof is conducted in a manner that does not compromise its quality from point of sale to the taps of consumers.

The Water Conservation Water Demand Management (WC/WDM) Programme will be accelerated in order to increase water-use efficiency to address water scarcity and substantially reduce the number of people suffering from water scarcity.

5.3 SDG 8: promote inclusive and sustainable economic growth, employment and decent work for all

The CoJ unemployment rate at December 2017 was 28.2% with the youth mostly affected. Through the EPWP and Community Development Programmes (CDP) the Company will create job opportunities as well as decent jobs while promoting inclusivity to the mainstream economy. We will also continue supporting entrepreneurship, creativity and innovation, and encourage the formalisation and growth of SMMEs, including through access to financial services. In creating decent jobs focus will be given for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.

5.4 SDG 9: Build resilient infrastructure, promote sustainable industrialisation and foster innovation

Through the AMP the company will develop and upgrade quality, reliable, sustainable and resilient infrastructure to support economic development and human well-being, with a focus on affordable and equitable access for all. The emphasis should be placed that upgraded infrastructure should be sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes.


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5.5 SDG 11: Make cities inclusive, safe, resilient and sustainable

The CoJ has identified sustainable human settlements as a key priority for this term of office. Among these is the CoJ’s commitment to providing basic services and infrastructure to all settlements, regardless of the settlement’s state of formality. The City is re-stitching itself through TOD in order to reverse apartheid’s spatial planning.

5.6 SDG 12: ensure sustainable consumption and production patterns

This goal is aligned to goal 6, 8 and 9 and as such the programmes of the aforementioned goals namely water demand management, AMP, access to basic services, EPWP and CDP will be responding to this goal.

5.7 SDG 13: take urgent action to combat climate change and its impacts

In response to this challenge JW has recognised the use of biogas as a means of contributing towards the reduction of greenhouse gas emissions. In this case methane gas which is a by-product at the WWTW is converted to energy and that energy fed back to the plant’s grid. This initiative also aligns to the Green Economy Programme.

Table 20 below indicates the key performance areas and indicators that are linked to the GDSs and targets are reflected in the BSC Annexure B.

Table 20: UN-SDGs KPIs linked to JW BSC

SDGs Goals Key Performance Area

KPI Baseline 2016/17

JW BSC – Targets2018/19 2019/20 2020/21

Goal 5 Female representation

% of female employees at elementary levels (Grades A1 to C2)

27.83% 29.15% 31% 33%

Goal 6 Drinking water quality

% of compliance with drinking water quality standard on E. Coli (SANS 241)

82.68% 87.03% 92.97% 100%

Access to water in informal settlements

% of informal HH with access to water at minimum LoS1

97.89% 85.09% 86.19% 87.23%

Access to sanitation in informal settlements

% of informal HH with access to sanitation at minimum LoS1

37.72%2 40.69% 43.03% 45.77%

Goal 8 Jobs created No. of Job opportunities created based on EPWP

1 114 2 022 2 789 1 957

2 16/17 based on 160 000 HH and other 3 years based on recalibrated 183 000 HH.


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SDGs Goals Key Performance Area

KPI Baseline 2016/17

JW BSC – Targets2018/19 2019/20 2020/21

Goal 9 Water and sewer infrastructure development

Renewal rate of water and sewer networks; and wastewater treatment works based on value

Water – 1.1%

Sewer – 0.4%

WWTW – 2.7%

Water – 1.9%

Sewer – 0.7%

WWTW – 2.7%

Water – 2.0%

Sewer – 0.9%

WWTW – 3.1%

Water – 2.0%

Sewer – 0.9%

WWTW – 4.5%

Goal 11 Roll-out of bulk infrastructure in Louis Botha, Empire-Perth and Turffontein

Water and sewer mains Construction and upgrade

2.5 Ml water tower and pump-station; 26 Ml reservoir and tower; upgrading of collector sewer

Target to be aligned to the shareholder's plans

Goal 12 Water use efficiency

Water consumption per capita

287.703 297 295 293

Water losses % of NRW 40.3% 35%Physical – 16%Commercial - 19%

32%Physical – 14.8%Commercial - 17.2%

30%Physical – 14%Commercial - 16%

Goal 13 Environmental pollution

% of final effluent compliance in all WWTW

74% 92% 93% 94%

3 The out-lier baseline figure was due to water restrictions introduced in 2016/17.

Chapter 6:Priority Implementation Plans

6.1 priority Implementation plans

Table 21 below contains Institutional priority programmes that the Company will contribute to realise City Priorities. KPIs are also provided to monitor performance

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Table 21: Priority Implementation Plans

IDP Programme

KPI Baseline2016/17

Target 2018/19

Target 2019/20

Target 2020/21

Key Interventions 2018/19 Budget per programme

2018/19 Quarterly Targets Means of verification

CapexR’000

OpexR’000

Q1 Q2 Q3 Q4


Percentage of NRW

40.3% NRW 35% NRW 32% NRW 30% NRW 1. Pressure Management

2. Mains Replacement

3. Retrofitting and Renewal projects

4. Active and Passive Leak Detection

5. Metering and Revenue protection project

150,000 100,000 AT AT AT 35% IWA Water Balance

Audit opinion Unqualified Audit

Clean Audit Clean Audit Clean Audit 1. Compliance to all relevant audit requirements.

2. Addressing matters raised by AG in management letter.

- - A/T A/T A/T A/T AG Report

% accounts billed on actual reading

84.09% accounts billed on actual reading on a monthly basis

95% 95% 95% 1. Regionalised meter reading

2. T-code project

10,000 - 95% 95% 95% 95% Meter Reading Ratio

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IDP Programme

KPI Baseline2016/17

Target 2018/19

Target 2019/20

Target 2020/21

Key Interventions 2018/19 Budget per programme

2018/19 Quarterly Targets Means of verification

CapexR’000

OpexR’000

Q1 Q2 Q3 Q4

Sustainable Human Settlement Upgrade Programme

% of HH in informal settlements with access to water at minimum LoS 1

82.68% HH in informal settlements with access to water at minimum LoS 1



100% HH in informal settlements with access to water at minimum LoS 1

Provision of Basic Services

20,000 - 83.89% HH in informal settlements with access to water at minimum LoS 1




Excel spreadsheet % coverage report with number of households serviced

% of HH in informal settlements with access to sanitation at minimum LoS 1

37.72% HH in informal settlements with access to sanitation at minimum LoS 1

40.69%HH in informal settlements with access to sanitation at minimum LoS 1

43.03% HH in informal settlements with access to sanitation at minimum LoS


Provision of Basic Services

- 45,000 38.94% HH in informal settlements with access to sanitation at minimum LoS




Excel spreadsheet % coverage report with number of households serviced

Infrastructure Investment Programme

% of Capex spend on Repairs and Maintenance

4.6% 7.3% 7.4% 7.6% Increase the rate of preventative maintenance on electro mechanical equipment, large diameter valves, PRVs and air valves

- 661,000 7.3% 7.3% 7.3% 7.3% Financial reports

% of Capex spend in infrastructure investment (repairs, refurbishments and upgrade)

59% 69% 69% 69% Replacement and refurbishment of aged existing infrastructure

381,000 - 69% 69% 69% 69% Capex % Report

Water Services Programme

Time taken to respond to water services interruptions after notification

90.25% 95% 95% 95% Networks to achieve six jobs per team per day

- 397,000 95% 95% 95% 95% Regional Response Report

Time taken to install new water connections after request

81.08% 95% 95% 95% Framework contracts for under road drilling

- 10,000 95% 95% 95% 95% Regional Response Report

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6.2 Day-to-day Operations

The daily operational programme of the entity that are core and supporting role in ensuring the entity function appropriately are contained in table 22 below.

Table 22: Day-to Day-Operations

Key Programmes KPI Baseline(2016/17)

Target 2018/19 financial year

2018/19 Budget (per programme) 2018/19 target(Tangible, measurable targets that fulfil requirements of being SMART)

CapexR’ 000

OpexR’ 000

Q1 Q2 Q3 Q4

Water Pipe Replacement

Length of water pipeline replaced

37 km water pipeline replaced


229,600 - 10 km water pipeline replaced




Water Pipe Replacement

No of bursts per 100 km of network length

319,01 bursts per 100 km of network length

350 bursts per 100 km of network length

N/A N/A 87 bursts per 100 km of network length




Sewer Pipe Replacement

Length of sewer pipe line replaced

37,7 km sewer pipe line replaced

42 km sewer pipe line replaced

145,600 - 5 km sewer pipe line replaced




Sewer Pipe Replacement

No of sewer blockages per 100 km of network length

488 blockages per 100 km of network length


N/A N/A 139 blockages per 100 km of network length




Quality of Water % of compliance with drinking water quality standard on E. Coli (SANS 241)

99.8% compliance with drinking water quality standard on E. Coli (SANS 241)

99% compliance with drinking water quality standard on E. Coli (SANS 241)

N/A N/A 99% compliance with drinking water quality standard on E. Coli (SANS 241)




Human Capacity Building

Total average training expenditure as percentage of identified ratio of total payroll

New 50 total average training hours per person spent on formal training

- 10,000 10 total average training hours per person spent on formal training

22 total average training hours per person spent on formal training



Service Delivery Programme

% effluent compliance in all WWTW

72.80% effluent compliance in all WWTW

72.80% effluent compliance in all WWTW

N/A N/A 92% effluent compliance in all WWTW

92% effluent compliance in all WWTW



Customer satisfaction survey

69% customer satisfaction


- - 70% customer satisfaction





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6.3 Batho Pele Principles

The Batho Pele (“People First”) principles are aligned to the Constitution – know the service you are entitled to. Government officials must follow the “Batho Pele” principles which require public servants to be polite, open and transparent and to deliver good service to the public. In executing the principles the focus areas for the company is on Services Standards.

A summary of the core service aligned to the service level standards and the related target is outlined under table 23 below:

Table 23: Service Standards

Core Service Service Level Standard Target

Planned water supply interruptions Percentage of water supply interruptions concluded within 12 hours of notification

95%

Repair of fire hydrants Percentage of fire hydrants repaired within 48 hours of notification 95%

Replace stolen meters Percentage of stolen meters replaced within 24 hours of notification 95%

Repair defective water meters Percentage of defective meters repaired within 3 days of notification 95%

Replacement of missing manhole covers Percentage of missing manhole covers replaced within 24 hours of notification

95%

Repair main pipe water bursts Percentage of water pipe bursts repaired within 48 hours of notification

95%

Repair leaking valves on main lines Percentage leaking valves on main lines repaired within 48 hours of notification

95%

Sewerage blockages cleared Percentage Sewer blockages cleared within 24 hours of notification 95%

New Water connection Percentage New water connection completed within 15 days of receiving request from customer

95%

Water Meter readings Percentage of accounts billed on actual readings monthly 95%

Communication of service interruptions Percentage of planned service interruption communiqués send within 7 days

95%

Percentage Unplanned interruption communiqués send immediately 95%

7.1 Financial Indicators

Revenue is budgeted to increase to R11.7 billion in the 2018/19 financial year, which is an increase of 13.2% on the forecast of R10.3 billion in 2017/18. This is mainly due to tariff increase as well as the anticipation of no water restrictions in 2018/19. In 2016/17 the country was hit with a severe drought which has seen the implementation of water restrictions and media campaigns requesting residents to reduce their water consumption. While the restrictions have been lifted, consumers have continued to use less water than before. This had an impact on revenue for the 2016/17 and 2017/18 financial year and it is expected to continue to reduce the usage by consumers going forward.

The budget going forward was calculated on the basis of no water restrictions.

Chapter 7:Financial Plan


59

Figure 15: Revenue Trends

SeRvice Revenue R’m

The average proposed tariff increase for 2018/19 is 14.2%. This is based on the RW proposed tariff increase of 12.2% and a retail margin of 2% to fund capital projects and loans. The increase is above both the inflation rate and the inflation target set by the South African Reserve Bank and may have a negative impact on consumer payment levels. The increase, however, does not adequately cover funding for the capital expenditure required to replace infrastructure reaching the end of its useful life over the next few years. Therefore, additional loans may be required to fund the shortfall.

Bulk purchases consist of the purchase of potable water from RW. The price is determined by a combination of a government pricing strategy which is determined by operating costs and loan repayments for capital infrastructure for the raw water, as well as the costs incurred by RW for the treatment of the water. For 2018/19, the increase from RW will be 12.2%.

This includes the Acid Mine Drainage (AMD) charge, which is levied by DWS through the Trans Caledon Tunnel Authority (TCTA) to the Vaal River water users through RW. The AMD charge was not separately levied in the raw water cost.

The bulk water volume purchases budget has been based on current consumption patterns with a 1.2% allowance for increases, which is below the population growth per the 2011 census.

The impact of water demand management initiatives, such as pressure valve management, active leakage control and the prepaid metering project, have been factored into the calculation. These initiatives are expected to yield a reduction in the cost of water purchases. 9.5 million Kilolitres are expected to be saved in 2018/19 financial year.

Actuals 2016/17

Budget 2017/18

Adjusted Budget 2017/18

Budget 2018/19

Budget 2019/20

Budget 2020/21

Service Revenue R'm 8,594 10,754 10,325 11,688 12,553 13,544

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000 R

mill

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Figure 16: net Profit

neT PRoFiT R’m

The net profit of the company in 2016/17 was R291 million and is forecasted to be R1 142 million in 2017/18. The budgeted profit for 2018/19 indicates a profit of R1 477 million.

Debt impairment/bad debt has been increasing steadily over a number of years, as reflected in Figure 17.

Figure 17: Debt impairment

DeBT imPAiRmenT/BAD DeBT

Actuals 2016/17

Budget 2017/18


Budget 2018/19

Budget 2019/20

Budget 2020/21

Net Pro�t R'm 0,291 1,501 1,142 1,477 1,623 1,797

0,000

0,200

0,400

0,600

0,800

1,000

1,200

1,400

1,600

1,800

2,000 R

mill

ion

Actuals 2016/17

Budget 2017/18


Budget 2018/19

Budget 2019/20

Budget 2020/21

Bad debt R'm 1,905 1,545 1,545 1,480 1,589 1,714

Provi B/Debt as % Revenue 22,17 14,37 14,97 12,66 12,66 12,66

0

500

1,000

1,500

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2,500

0.00

5.00

10.00

15.00

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R'm

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Debt impairment/bad debt for 2018/19 is projected at R1.5 billion, as compared to the budget of R1.5 billion for 2017/18 and the actual debt impairment of R1.9 billion on 2016/17 financial year. The calculation of debt impairment is based on the collection rate of 84.7%. The increment of non-payment by consumers is of concern since it has a direct negative impact on availability of funds for service delivery and capital expenditure. To improve the situation, enforcement of the credit control policy will continue by disconnecting all non-paying customers and regular reviews to ensure that customers are not illegally reconnected. Additionally, credit control efforts will increase to ensure monies are collected from all residents for services rendered. The credit control team at JW will continue to work with the credit control team at Revenue Shared Services Centre (RSSC) and they will in future assist with collection of the top customers which will not just be water only accounts.

The RSSC continues to do the billing and collections of all revenue. JW currently has 11 credit controllers to assist with the collection of the water and sanitation only accounts. This team does not have access to make any adjustments of updates on the customer’s accounts, but they assist by calling customers to find out why accounts are in arrears and then facilitate updates on the accounts through the meter reading department and the billing department at CoJ. They would also request for non-paying accounts to be terminated through the billing department at CoJ.

Currently this team collects monies from 30 000 accounts. Due to the size of the team, the follow ups are only done as per the outstanding balances. The customers with the longest outstanding amounts are prioritised.

Device management team from the City will be moving to JW which will assist mostly in billing information. It is anticipated that the move will be done before the start of the new financial year.

7.2 Control over Operating Costs

General expenses will increase to R796 million due to increased maintenance on water and sanitation infrastructure, software licenses for IT systems, communications, and increased electricity demand as well as security services for JMPD to be treated as internal charges.

The operating costs per major category are reflected in Figure 18 below.

Figure 18(a): operational expenses

oPeRATionAl exPenSeS TRenD

Actuals 2016/17

Budget 2017/18


Budget 2018/19

Budget 2019/20

Budget 2020/21

Employee Related Costs R'm 934 987 990 1,081 1,146 1,220

Contracted Services R'm 425 560 523 653 688 725

General Expenses R'm 510 714 682 789 832 880

0

200

400

600

800

1,000

1,200

1,400

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Figure 18(b) below shows that the salaries continue to reduce in relation to revenue as a result of strict controls over new positions. General expenses increase after sever budget cuts in 2016/17 and then shows a flat curve. Contracted services are higher than 2016/17 and 2017/18 because of severe budget cuts in those years.

Figure 18(b): expenditure as a % of Revenue

exPenSeS To Revenue TuRnoveR

Employee-related cost is budgeted to increase from R990 million in 2017/18 to R1.0 billion in 2018/19 (8.61% increase).

The cost of living adjustment is set at 6.1% in the absence of the finalized of wage negotiation. A further R32 million in 2018/19 financial year is for first line response teams as well as insourcing of meter reading. No additional or critical vacancies were added. The total employee cost as a percentage of total operating costs is 22.0% which is below the 30% benchmark of the CoJ and National Treasury as illustrated in Figure 19.

Actuals 2016/17

Budget 2017/18


Budget 2018/19

Budget 2019/20

Budget 2020/21

Employee related Costs 10.9% 9.2% 9.6% 9.3% 9.2% 9.0%

Contracted Services 4.9% 5.2% 5.1% 5.6% 5.5% 5.4%

General Expenses 5.9% 6.6% 6.6% 6.8% 6.7% 6.6%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%


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Figure 19: Salary Trends

SAlARieS AS % oF oPex

JW ended the 2016/17 year on 21.8% salaries to operating expenses. The budget for 2017/18 is 23.1% and the budget for 2018/19 is 23.60%, the ratio is within the National Treasury’s benchmark of 30%.

The budget for contracted services (excluding the CoJ service fee) will be increased to R653 million from R523 million in 2017/18. The original budget 2017/18 was reduced by R37 million on contracted services, R32 million on general expenses and R5 million on repairs and maintenance.

The major increase in contracted services for 2018/19 financial year is as a result of additional expenditure relating to repairs and maintenance to water and sewer infrastructure, including repairs to collapsed sewer, under road drilling, construction and retrofitting of chambers and pipe work.

7.3. Cash Generated from Operations

The low payment level from customers remains a concern. During 2016/17 the payment level was 83.3% and the forecast for 2017/18 is 85.8%. The budgeted payment level in 2018/19 is 84.7% and will require strict implementation of the credit control policy with CoJ and increased law enforcement to effectively deal with illegal connections.

Actuals 2016/17

Budget 2017/18


Budget 2018/19

Budget 2019/20

Budget 2020/21

Salaries as % of Opex 21.8 22.7 23.1 23.6 23.6 23.5

20.0

20.5

21.0

21.5

22.0

22.5

23.0

23.5

24.0

Perc

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Figure 20: Payment levels

PAYmenT level

The cash balance is swept to CoJ in terms of the treasury management arrangement. At the end of 2016/17, JW had cash reserves of R216 million. The projected cash reserve for the Medium-Term Expenditure Framework (MTEF) is reflected in Figure 21.

Figure 21: Projected cash Reserve

cASh AT BAnk R’m

The cash position for 30 June 2019 is budgeted at R330 million (forecast 2017/18: R215 million). The continuous reduction of cash at bank is due to an increased funding of CAPEX from own resource rather than through loans.

Actuals 2016/17

Budget 2017/18


Budget 2018/19

Budget 2019/20

Budget 2020/21

% Total Payment Level 83.3 85.8 85.8 84.7 84.9 85.3

60.0

65.0

70.0

75.0

80.0

85.0

90.0

Perc

enta

ge

Actuals 2016/17

Budget 2017/18


Budget 2018/19

Budget 2019/20

Budget 2020/21

Cash at Bank R'm 216 398 215 330 556 644

0

100

200

300

400

500

600

700

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7.4. Solvency

JW budgeted to be in a strong solvency position, with its total assets exceeding the total liabilities by R9.2 billion in 2018/19. The solvency ratio as at 30 June 2019 is 1:2:94 as illustrated in Figure 22.

Figure 22: Solvency Ratio

SolvencY RATio

7.5. Capital projects

The capital expenditure is budgeted as follows: » June 2019 R901 million » June 2020 R1,251 million » June 2021 R985 million

The capital budget has increased from what was previously approved by CoJ to address backlogs, upgrading and renewal of ageing infrastructure and new infrastructure requirements.

The source of funding for CAPEX is reflected in Figure 23. Own funding depends largely on increased payment levels. The affordability of funding for infrastructure remains a challenge, especially if payment levels do not improve or deteriorate due to prevalent economic conditions.

Actuals 2016/17

Budget 2017/18


Budget 2018/19

Budget 2019/20

Budget 2019/20

Total Assets R'm 12,622 13,102 13,138 13,965 15,687 16,869

Total Liabilities R'm 6,600 5,358 5,394 4,744 4,843 4,228

Solvency Ratio % 1.91 2.45 2.44 2.94 3.24 3.99

0.00

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14,000

16,000

18,000

Perc

enta

ge

R' M

illio

n


66

Figure 23: Sources of Funding

SouRceS oF FunDinG

7.6. revenue and tariff analysis

Due to the fact that water is not being sold at cost reflective tariffs, a decision was made in 2017/18 to bring the tariff closer to the cost. The first step was to remove the six kilolitre (kℓ) free water allocated per household per month other than for indigents in the 2017/18 financial year. Indigents continued to receive up to 15 kℓ per month per household. It is proposed that the differential tariff increases continue to be applied to different tariff bands for domestic water and prepaid water and sanitation tariffs (refer to Tables 23 and 24) below.

It is also envisaged that the lowest tariff should not be lower than the RW tariff, which has been the case in the past. It was decided to do a partial increase to close the gap between the current tariff for 0-6 kilolitre and 6 – 10 kilolitres which was substantially lower than the cost of water, excluding the cost of the reticulation and distribution to the households. The cost of water from RW in the 2018/19 year will be R9.35 per kilolitre.

A rate of 14.2% is applied to institutional and industrial/commercial water consumption up to 200 kℓ per customer and a rate of 14.2% for consumption exceeding 200 kℓ. The tariff for all other services provided is to be increased by 14.2% for 2018/19. The total average tariff increase for all services provided would be 14.2%.The intention of JW is to roll out pre-paid meters to other areas commencing in the new financial year. There is however a large discrepancy in the tariff for pre-paid water. An attempt was made to narrow the gap to avoid further losses when prepaid is rolled out to other areas.

The increase in the 6–10 kℓ category will take the cost to R8.86 which is still substantially below the cost of water from RW. High water users will have to pay an increase of up to 17.7% to encourage responsible water usage.

The trend of tariff increases can potentially make it unaffordable for households to afford water sold and other services provided by JW. This may increase the provision for bad debts and negatively impact the financial sustainability of the CoJ. To improve the situation, enforcement of the credit control policy by disconnecting all non-paying customers and regular reviews to ensure that customers are not illegally reconnected will continue and also increase credit control efforts to ensure monies are collected from all residents for services rendered. The second contributor to the affordability of our services is the sovereign credit downgrade of the country, which will have the following impact: » More South Africans pay more on interest » Food, electricity and petrol prices increase » Unemployment increases due to retrenchments and factory shut downs » Low confidence therefore low investments and no new jobs created » The rand will be worth less making imported goods more expensive.

55% - CoJ Funding (Loans)

22% - Own Funding

23% - USDG


67

JW is currently in process of investigating and to set up special tariffs which will be used during drought seasons.

7.7. proposed tariff Increase

Domestic water and prepaid water and sanitation tariffs will be increased as follows:

Table 24: metered area domestic - Water

Metered areas domestic

Kilolitres 2017/18 % Increase 2018/19 2019/20 2020/21

Per connection per month

Tariff Tariff Tariff Tariff

(R/kl) (R/kl) (R/kl)* (R/kl)*

0-6 7,14 16.9% 8,35 8,96 9,67

> 6-10 7,58 16.9% 8,86 9,52 10,27

>10-15 13,17 14.9% 15,13 16,25 17,54

>15-20 19,63 12.2% 22,02 23,65 25,52

> 20-30 26,96 12.2% 30,25 32,49 35,05

> 30-40 29,22 14.7% 33,52 36,00 38,84

> 40-50 37,11 15.3% 42,79 45,95 49,58

> 50 38,72 17.7% 45,57 48,95 52,81

Prepaid water

Kilolitres 2017/18 % Increase 2018/19 2019/20 2020/21




0-10 5,87 30.0% 7,63 8,20 8,84

> 10-15 8,39 16.9% 9,81 10,53 11,37

> 15-20 16,25 12.2% 18,23 19,58 21,13

> 20-30 25,81 12.2% 28,96 31,10 33,56

> 30-40 27,98 12.2% 31,39 33,72 36,38

> 40-50 36,80 12.2% 41,29 44,35 47,85

> 50 44,16 3.2% 45,57 48,95 52,81

Table 25: Proposed Private Dwelling - Domestic Sanitation

Proposed Private Dwelling Sanitation

ERF Size (m²)

2017/18 2018/19 2019/20 2020/21


(R/erf/month) (R/erf/month) (R/erf/month)* (R/erf/month)*

Up to and including 300m² 171,97 196,39 210,92 227,59

larger than 300m² to 1000m² 334,76 382,30 410,59 443,02

larger than 1000m² to 2000m² 506,44 578,35 621,15 670,22

larger than 2000m² 729,70 833,32 894,99 965,69


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Table 26: Proposed Private Dwelling - Prepaid Sanitation

Pre-paid Domestic Sanitation

Kilolitres per connection per month

2017/18 2018/19 2019/20 2020/21

Tariff Subsidised measured





0-10 3,75 7,50 8,06 8,69

>10-15 4,94 9,50 10,20 11,01

>15-20 9,59 11,50 12,35 13,33

>20-30 14,96 17,08 18,35 19,80

>30-40 16,02 19,50 20,94 22,60

>40-60 20,16 23,02 24,73 26,68

>60 20,16 10,00 10,74 11,59

Institutional and industrial/commercial tariffs are to be increased by: » Consumption up to 200 kℓ at 14.2% » Consumption exceeding 200 kℓ at 14.2% » All other tariffs increased by 14.2%. » Demand levy increased by 14.2%

Note: the lower tariff bands increases are slightly lower than the average increase as results of them being expensive and over the years they had higher increases.

Effluent re-use charges will be as follows.

Name of catchment 2018/19 (R/kl)

Integrated Vaal River System (IVRS) R 3,91

Crocodile West Marico R 4,72

7.8. proposed Water restriction tariff

The water restriction tariff was introduced in 2016/17. The aim of these tariffs is to encourage residents to save water during water restrictions. The tariff is applicable for consumption over 20 kℓ per month. The table below depicts water restriction tariffs per band (consumption levels).


69

Table 27: Proposed Water Restriction Tariff – Domestic

Water restriction tariff domestic

Kilolitres 2017/18 2018/19


Tariff Normal tariff % Increase Rand per increase Final water restriction tariff

(R/kl) (R/kl) (R/kl) (R/kl)

0-6 7,14 8,35 0% 0,00 8,35

> 6-10 7,58 8,86 0% 0,00 8,86

>10-15 13,17 15,13 0% 0,00 15,13

>15-20 19,63 22,02 0% 0,00 22,02

> 20-30 26,96 30,25 15% 4,54 34,79

> 30-40 29,22 33,52 35% 11,73 45,25

> 40-50 37,11 42,79 50% 21,39 64,18

> 50 38,72 45,57 60% 27,34 72,92

Table 28: Proposed Water Restriction Tariff – Domestic

Water restriction tariff prepaid

Kilolitres 2017/18 2018/19


Tariff Normal tariff % Increase Rand per increase Final water restriction tariff

(R/kl) (R/kl) (R/kl) (R/kl)

0-10 5,87 7,63 0% 0,00 7,63

> 10-15 8,39 9,81 0% 0,00 9,81

> 15-20 16,25 18,23 0% 0,00 18,23

> 20-30 25,81 28,96 15% 4,34 33,30

> 30-40 27,98 31,39 35% 10,99 42,38

> 40-50 36,80 41,29 50% 20,64 61,93

> 50 44,16 45,57 60% 27,34 72,92

8.1 Organisational Structure

The organisational structure that is envisaged to serve the Company through 2018/19 is as below, figure 24. Due to possible personnel changes the names of incumbents are omitted.

Figure 24: Organisational Structure

Chapter 8:Management and Organisational Structure

mANAGING DIRECTOR

ExECUTIvE mANAGER:HR and Corporate Services

ChIEF INTERNAl AUDITOR FINANCIAl DIRECTOR COmPANY SECRETARY

ExECUTIvE mANAGER:Stakeholder Relations and Communication

SENIOR mANAGER:Risk, Compliance and Business Continuity

GENERAl mANAGER:Strategy, Monitoring

and Evaluation

ChIEF OPERATIONS OFFICER


71

Analysis of the company organisational structure

It will be noted that the top three levels in the Company are indicative of the major departmental heads. The span of control is adequate and will serve JW in 2018/19 in the delivery of its mandate.

Management Team: Direct reports to the Managing Director

The organisational structure as reflected under figure 20 above reflects the lean nature of the management team in the Company with the span of control for the Managing Director providing for eight direct reports one of whom is appointed in an office support (staff ) function. The structure provides for a combination of officials responsible for Governance, Combined assurance and Risk management as well as a Chief Operations Officer that oversees service delivery.

The roles pertaining to HR and Corporate Services as well as Stakeholder Relations and Communication are held in acting positions, due to the pending integration of the entity to the City, however, the current management team is equipped to steer JW in the right direction.

As articulated in the MFMA, this section covers a summary of any risks to achieving revenue projections, and expected major shifts in revenue patterns and any non-discretionary expenditure.

The management of risk in JW is guided by an entity-wide Risk Management Framework consisting of the following interrelated elements; » Establishment of general, external and internal context in which JW operates » Development of JW’s risk profile both at strategic and operational level• Identification of risks• Analysis and prioritisation of risks

» Integrating risk profiles by mapping risks against risk appetite and tolerance levels » Measurement of risk response and development of mitigation strategies » Monitoring and review of risks » Communication and reporting

The management of risks is assimilated in the strategy and business planning as well as all operational processes of JW. The BP is reviewed and amended each year to take into account any changing needs of the business and operating environment through the annual strategy planning session driven by the Board. During these annual planning cycles, we identify and assess the most significant potential risks to the delivery of our objectives and how these risks will be managed and monitored alongside the assurance activities provided by our independent internal audit.

The risk accountability and responsibility is guided by the following priority scale; » The Board, which is ultimately accountable for Risk Management, ensures that risk is proactively managed in the company. » The Audit and Risk Committee, which comprises the Non-Executive, Executive Directors and Executive Management, monitors the status of strategic and operational risks on a quarterly basis and report these to the Board.

Chapter 9:Risk Management


73

» The Risk and Compliance Department facilitates risk management ownership by management and provides a standardised strategic and operational risk management methodology and process. It ensures reporting on all risk management activities and exposures to the Executive Committee via the Audit and Risk Committee.

The Board has delegated responsibility for day to day risk management to the Managing Director who in turn relies on the executive committee to identify, evaluate, mitigate and monitor the key risks facing the company and to implement the approved integrated risk management processes and controls. The delegation of responsibility is outlined in the risk management diagram set out below. Figure 25: Delegation of Responsibilities

INTEGRATED APPROACH TO RISK MANAGEMENT

The business planning process is a key annual process and enables us to undertake an annual review of the Strategic Risk Profile of JW. The process adopts an integrated approach to risk management which covers all material financial, operational, compliance, reputational and sustainable development risks. It is through this process that we; » Confirm and update the Strategic Risk Register » Identify key risks that are aligned to key strategic and operational priorities » Consider the implications of key risks and mitigation measure thereof » Identify emerging risks and develop mitigation strategies to deal with such.

BOARD OF DIRECTORS

AND AuDIT AND RISK COMMITTEE

ExECuTIvE COMMITTEE

BuSINESS uNITS

Integrated business plan linked to long

term strategy

Operational business reviews

against objectives, KPIs and budgets

Audit and assurance over

risk management and internal

control

Continuous and integrated risk management embedded in

operational activities

Risk ownership and control

OPERATIONAL BuSINESS RISK MANAGEMENT AND COMPLIANCE

1. IDENTIFICATIONFinancial and non financial risks reorded in corporate and operational risk registers.

4. MITIGATIONRisk owners identified along with mitigation, monitoring and controls.Robust mitigation strategy subject to regular and rigorous review.

2. ANALYSISRisks analysed for impact and likelihood to determine inherent risk exposure.

3. EvALuATIONRisk exposure reviewed and risks ranked.

ACC

Ou

NTA

BILI

TY F

OR

MO

NIT

ORI

NG

RESPON

SIBILITY FOR IM

PLEMEN

TING

Responsible for risk strategy and

management within the parameters of the

strategic business plan and ensuring that the

risk management process is effective.

Provides oversight to the risk management process.

aNNeXUreS:

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annexure a: Summary of Capital programmes

Summary of Capital Programmes

Name of Program Project Name Capital Budget (R’000) Return on Investment COJ Regions

2018/19 2019/20 2020/21


Infrastructure Upgrade and Renewal (Retrofitting & leaks repair)

105,360 249,750 40,206 Total water savings of 36 000 Ml per annum (R 245 Million water saving per annum at a current rate of R 6.81/ kl)

City Wide

Pipe Replacement 143,520 210,000 316,000 Potential Water savings of 1 296 Ml/annum on completion of programme equivalent to R 8.8 Million/year).

City Wide

O & M Category (including pressure management)

89,000 111,000 51,000 Potential Water savings of 1 296 Ml/annum on completion of programme equivalent to R 8.8 Million/year).

City Wide

Bulk Wastewater Expansion and upgrades

Olifantsvlei heating and mixing / refurbishment

29,000 42,000 27,000 Treatment service continuity D & F

Bushkoppies balancing tank / refurbishment

42,500 40,000 28,000 Treatment service continuity D

Goudkoppies (Refurbishment) 30,000 56,000 7,000 Treatment service continuity D & F

Northern Works Upgrade & Refurbishment) 460 Ml/d

56,000 75,000 119,500 Treatment service continuity A, B,C & E

Driefontein concrete lining over-flow / refurbishment

34,000 6,000 17,000 Treatment service continuity C

Lanseria 50Ml/d 5,000 5,000 5,000 Treatment capacity for 50 000 HH equivalent A & C

Ennerdale (refurbishment) 6,000 0 17,000 Treatment service continuity G

WWTW General (Biogas) 1,000 6,000 19,500 Treatment service continuity City

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Summary of Capital Programmes

Name of Program Project Name Capital Budget (R’000) Return on Investment COJ Regions

2018/19 2019/20 2020/21

Reservoirs Blue Hills Tower 1.8 Ml 5,000 10,000 0 Storage capacity for 1 800 HH equivalent A

Pretoriusrand Reservoir 10Ml 0 5,000 0 Storage capacity for 10 000 HH equivalent A

Pretoriusrand Tower 1.2Ml 0 3,000 0 Storage capacity for 1 200 HH equivalent A

Robertville Tower 2.25Ml 10,000 10,000 0 Storage capacity for 2250 HH equivalent C

Diepsloot Reservoir 40 Ml 0 5,000 0 Storage capacity upgrade for 40 000 HH equivalent

A

Diepsloot Tower 1.6 Ml 0 2,000 0 Storage capacity upgrade for 1 600 HH equivalent

A

Woodmead Reservoir 20Ml 10,000 10,000 10,000 Storage capacity for 20 000 HH equivalent E

Halfway House Reservoir 20Ml 8,000 20,000 0 Storage capacity for 20 000 HH equivalent A

Winchester Hills Reservoir 12 Ml 0 0 2,000 Storage capacity for 12 000 HH equivalent F

Crown Gardens Tower 1.1 Ml 12,000 6,000 0 Storage capacity upgrade for 1 100 HH equivalent

F

Aeroton Tower 1.4 Ml 15,000 5,000 0 Storage capacity 1 000 HH equivalent F

Erand Tower 0.75 20,000 5,000 0 Storage capacity 500 HH equivalent A

Kensington booster 1.4 Ml 0 1,000 5,000 Storage capacity 1,400 HH equivalent F

Lawley High Level Reservoir 10 Ml 0 2,000 5,000 Storage capacity 10,000 HH equivalent G

Dobsonville Reservoir 15 Ml 0 0 2,000 Storage capacity 15,000 HH equivalent D

Brixton Reservoir 26 ML 0 0 2,000 Storage capacity 26,000 HH equivalent B

Brixton Tower 2Ml 0 0 2,000 Storage capacity 2,000 HH equivalent B

Crown Gardens Reservoir 20 Ml 0 0 2,000 Storage capacity 20,000 HH equivalent F

Crosby Tower 1.4 Ml 0 0 2,000 Storage capacity 1,400 HH equivalent B

Linbro Park Tower 3.9 Ml 0 0 1,000 Storage capacity 3,900 HH equivalent E

Lion Park Reservoir 15 Ml 0 0 2,000 Storage capacity 15,000 HH equivalent A

Doornkop West Reservoir 50 Ml 0 2,000 0 Storage capacity 1,500 HH equivalent C

Sewer upgrade Sewer Pipe Replacement (City Wide) 145,600 266,682 179,744 Reduced number of blockages per 100 meters.

City Wide

Water upgrade Water Pipe Upgrade (Networks) 67,000 69,500 64,000 To maintain capacity for current demand and create capacity for future demand to support developments

City Wide

Other Small projects, IT, engineering studies and operational capital

66,660 28,500 59,500 Water supply continuity City Wide

TOTAL 900,640 1,251,432 985,450

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annexure B: Strategic Balanced Scorecard

MayoralPriorities

Strategic Goals KPI Weight Baseline2016/17

2017/18Q3 Actual

2018/19Target

Q1 Target Q2Target

Q3 Target

Q4 Target 2019/20Target

2020/21Target

KPI Owner

REF#

Priority 1:Promote Economic Development and attract Investment towards achieving 5% economic growth

Priority 2:Ensure pro-poor development that addresses inequality and poverty and provides meaningful redress

Strategic Goal 1:Utilise infrastructure delivery to create jobs,support SMMEs and attract investments

Weight: 25%

No. of sewerblockages per 100 km of network length

20% 488,11 sewerblockages per 100 km of network length

414,06 sewerblockages per100 km of network length

545 sewerblockages per 100 km of network length


278 sewerblockages per100 km of network length





COO 1

No. of water pipe bursts per 100 km on network length

20% 375,78 water pipe bursts per 100 km on network length

261,65 water pipe bursts per 100 km on network length

350 water pipe bursts per 100 km on network length


173 water pipe burstsper 100 km on network length





COO 2

Renewalrate of water and sewer networks; and WWTW based on value

20% 1.1 renewal rate of water and sewer networks; and WWTW based on value

0.5 Renewal rate of water and sewer networks;and WWTW based on value

1.4 renewal rate of water and sewer networks; and WWTW based on value







COO 3

% CAPEXspend

10% 98% 47% 95% CAPEXspend

10% CAPEXspend

35% CAPEXspend

60% CAPEXspend

95% CAPEXspend

95% CAPEXspend

95% CAPEXspend

COO 4

% total B-BBEE procurement recognition spent on qualifying SMMEs

10% 127%B-BBEE procurement recognition spent on qualifying SMMEs

126% B-BBEE procurement recognition spent on qualifying SMMEs

125%B-BBEE procurement recognition spent on qualifying SMMEs







FD 5

No. of job opportunities created based on EPWP

10% 1,114 job opportunities createdbased onEPWP

540 job opportunities created based on EPWP

2,022 job opportunities createdbased onEPWP

413 job opportunities createdbased onEPWP

929 job opportunities created based on EPWP

1,548 job opportunities created based on EPWP




COO 6

Number of SMMEs supported through community upliftment projects

10% 127 SMMEs supported through community upliftment projects

47 SMMEs supported through community upliftment projects








COO 7

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MayoralPriorities


2017/18Q3 Actual

2018/19Target

Q1 Target Q2Target

Q3 Target


2020/21Target

KPI Owner

REF#

Priority 3:Create a culture of enhanced service delivery with pride



Strategic Goal 2: Deliver water and sanitation service of good quality that is accessible, reliable and efficient in an environmentally responsible/ sustainable way

Weight: 21%

% compliance with drinking water quality standard onE. Coli (SANS241)

10% 99.80% compliance with drinking water quality standard onE. Coli (SANS241)

99.9% compliance with drinking water quality standard on E. Coli (SANS 241)

99% compliance with drinking water quality standard onE. Coli (SANS241)







COO 8

% informal HH with access to water at minimum LoS1

32.5% 82.68% informal HH with access to water at minimum LoS1

82.68%(136 802) informal HH with access to water at minimum LoS1

87.03% (156 481) informal HH with access to water at minimum LoS1






100% (160 407) informal HH with access to water at minimum LoS1

COO 9

% informal HH with access to sanitation at minimum LoS1 (cumulative no. of HH)

32.5% 37.72% informal HH with access to sanitation at minimum LoS1

37.72%(66 895) informal HH with access to sanitation at minimum LoS1

40.69% (74 349) informal HH with access to sanitation at minimum LoS1







COO 10

% final effluent compliance in all WWTW

25% 74.03% final effluent compliance in all WWTW

72.80% final effluent compliance in all WWTW

92% final effluent compliance in all WWTW







COO 11




Strategic Goal: 3Improve customer and stakeholder satisfaction

Weight: 20%

Water consumption per capita

30% 287,70water consumption per capita

286,88 water consumption per capita

297water consumption per capita







COO 12

% water bursts restored within 48 hours of notification

30% 90.25% water bursts restored within 48 hours of notification

88.19% water bursts restored within48 hours of notification

95% water bursts restored within 48 hours of notification


95% water burstsrestored within48 hours of notification





COO 13

% sewer blockage cleared within24 hours of notification

30% 95.48% sewer blockage cleared within 24 hours of notification

94.6% sewer blockage cleared within 24 hours of notification

96% sewer blockage cleared within 24 hours of notification


96% sewer blockage cleared within24 hours of notification

96% sewer blockage cleared within24 hours of notification




COO 14

% accounts billed on actual reading

10% 84.09% accounts billed on actual reading on a monthly basis

84.14% accounts billed on actual reading on a monthly basis

95% accounts billed on actual reading on a monthly basis







FD 15

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MayoralPriorities


2017/18Q3 Actual

2018/19Target

Q1 Target Q2Target

Q3 Target


2020/21Target

KPI Owner

REF#

Priority 5:Create an honest and transparent City that fights corruption

Priority 7: Enhancing our financial sustainability

Strategic Goal 4: Enhancesound financial management, sustainability and clean governance

Weight: 20%

% NRW 40% 40.3%NRW

AT 35% NRW (Physical= 16, commercial= 19)

AT AT AT 35% NRW (Physical= 16, commercial= 19 )

32% NRW (Physical= 14.8, commercial= 17.2)

30% NRW (Physical= 14, commercial= 16)

COO 16

Rand net profit before bad debt provision

40% R2,399 million net profit before bad debt provision

R1,912 million net profit before bad debt provision


R672 million net profit before






FD 17

Audit Opinion

20% Unqualified audit opinion

AT Clean audit opinion

AT AT AT Clean audit opinion

Clean audit opinion

N/A FD 18

Priority 8:Encourage innovation and efficiency through the Smart City Programme

Strategic Goal 5: Use of technologyfor effective and efficient operations

Weight: 4%

Number of business units fully deployed with Business Analytics Dashboard

100% New 0 - Number of business units fully deployed with Business Analytics Dashboard

3 business units (FI, Ops and MRD) fully deployed with Business Analytics Dashboard)

Ops business unit 25% deployed with Business Analytics Dashboard

Ops business unit fully deployedwith Business Analytics Dashboard

MRD business units 25% deployedwith Business Analytics Dashboard

3 business units (FI, Ops and MRD) fully deployed with Business Analytics Dashboard

SCM business unit fully deployed with Business Analytics Dashboard

CAPEX and Risk business units fully deployed with Business Analytics Dashboard

FD 19


Strategic Goal 6: Invest inour staff to sustain optimal performance and service- focused culture with committed people

Weight: 10%

% female employees at elementary levels (Grades A1–C2)

25% 27.83% 28.87% female employees at elementary levels (Grades A1–C2)

29.15% female employees at elementary levels (Grades A1–C2)

AT AT AT 29.15% female employees at elementary levels(GradesA1–C2)

31% female employees at elementary levels(GradesA1–C2)

33% female employees at elementary levels(GradesA1–C2)

HR&CS 20

% staff designated as PWD

25% 3.73% 3.98% staff designated as PWD

3.87% staff designated as PWD

AT AT AT 3.87% staff designated as PWD



HR&CS 21

Total average training hours per person spent on formal training events

25% 45,7 hours per person

27,72 average training hours per person spent on formal training events

50 average training hours per person spent on formal training events







HR&CS 22

NOSAstar rating achievement

25% NOSA 4-Star Rating

Internal self-audits conducted in addressing gaps and measuring progress

4-StarNOSA rating achievement

AT AT AT 4-StarNOSA rating achievement



HR&CS 23

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annexure C: KpI Definitions, Calculations and Means of Verification

Ref # KPI Definition KPI Calculation Formula Means of Verification1 Number of sewer

blockages per 100 km of network length

Frequency of sewer blockages being experienced as an indication of the sewer infrastructure performance and condition

(A) Number of works orders received sewer main blockages/(B) total length of sewer mains/100(C) A / B = Number of blockages per 100 km (monthly)

System-generated Ops indicator report, IMQS infrastructure lengths and Excel calculation sheet

2 Number of water pipe bursts per 100 km on network length

Frequency of water bursts being experienced as an indication of water infrastructure performance and condition

(A) Number of works orders received R&M mains + number of works orders received R&M valves and hydrants /(B) Total Length of water mains/100

System-generated Ops indicator report, IMQS infrastructure lengths and Excel calculation sheet

3 Renewal rate of water and sewer networks;and WWTW based on value

Renewal rate of water and sewer networks; and WWTW electromechanical components based on value

Renewal rate = total cost of infrastructure renewal expenditure divided bynetwork replacement cost + WWTWelectro-mechanical replacement cost

Excel calculation sheet on renewal rate based on asset value

4 % CAPEX spend The rand value expressed as a percentage of capital budget spend against the allocated budget

A= CAPEX spendB= CAPEX allocated

% CAPEX spend= (A/B)*100

Reports drawn from SAP system

5 % total B-BBEE procurement recognition spent on qualifying SMMEs

The B-BBEE procurement recognition spent figure for EMEs and QSEs comprises the total measured procurement spend from each supplier in this category, where EME are all exempted micro enterprises with a turnover of less than R10 m and QSEs are qualifying SMEs with a turnover of between R10 m– R50 m with a B-BBEE scorecard or affidavit

B-BBEE procurement spend is based on actual expenditure incurred (i.e. invoiced amounts)

All goods and services procured within the relevant financial year, comprising operational and capital expenditure

Formula: A = sum of (B x C) where:(A) is the sum total of B-BBEE procurement spend(B) is the value of procurement falling within the total measured procurement spendfrom each supplier(C) is the recognition level of each supplier with a B-BBEE certificate

Reports drawn from SAP and downloaded onto Excel spreadsheet

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Ref # KPI Definition KPI Calculation Formula Means of Verification6 Number of jobs

opportunities created based on EPWP

The EPWP was initiated by the South African Government and is aimed at creating4.5 million work opportunities by employing labour-intensive methods

N/A Excel database sheet with number of jobs created

7 Number of SMMEs supported through community upliftment projects

SMME support through community upliftment projects will assist with economic development, job creation and poverty alleviation

N/A Excel database with number of SMMEs supported

8 % compliance with drinking water quality standard on E. Coli (SANS 241)

% of drinking water samples complying with the SANS 241 E. Coli standard to the number of drinking water samples taken

(A) Number of tests Complying/(B) Number of tests(C) A / B = % compliance (monthly)

System-generated drinking water quality report on LIMS

9 % informal HH with access to water at minimum LoS1

A basic water service refers to provision of water in informal settlements through the installation of communal standpipes

% coverage = (cumulative no. of HH serviced / total no. of HH in informal settlement

Excel spreadsheet % coverage report with number of household serviced

10 % informal HH with access to sanitation at minimum LoS1

(cumulative no. of HH)

A basic sanitation service refers to provision of sanitation in informal settlements through the installation of VIPs and ablution blocks

% coverage = (cumulative no of HH serviced / total number of HH in informal settlement

Excel spreadsheet % coverage report with number of household serviced

11 % final effluent compliance in all WWTW

The overall % compliance of the wastewater treatment plants to the compliance parameters as stipulated in their individual water use licences

(Total number of daily samples per works per indicator per month complying with the limit in the water use licence) / (total number of daily samples per works per indicator per month) x 100 = % monthly compliance per works per indicator in the water use licence

System-generated effluent quality LIMSreports and Excel calculation sheets

12 Water consumption per capita

Volume of water supplied to each person per day, including losses being experienced on the reticulation system

(A) system input volume in the period under review, (B) population as per Census 2011 with 3.5% growth per year and (C) the number of days of the period under review.(D) H/H water consumption per capita per Day = a/b/c

Bulk system input volumes Excel sheet based on RW and cross-boundary invoices and Excel calculation sheet

13 % water bursts restored within 48 hours of notification

The % water bursts repaired within 48 hours to the number of water burst reported as one of the service delivery functions linked to customer satisfaction

(A) Number of WO completed (major and minor bursts) in time(B) Number of WO received (major and minor bursts)A/B = % response time (monthly)

System-generated regional response Time (RRR) report

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Ref # KPI Definition KPI Calculation Formula Means of Verification14 % of sewer blockages

cleared within 24 hours of notification

The % sewer blockages cleared within 24 hours to the number of sewer blockages reported as one of the service delivery functions linked to customer satisfaction

Number of WO completed (sewer main blockages) in time(B) Number of WO received (sewer main blockages)A/B = % response time (monthly)

System-generated RRR report

15 % accounts billed on actual reading

The % actual metered connection read to readable metered connections as one of the principal billing functions that links customer consumption with revenue performance

Number of meters billed on actual readings/ Number of meters downloaded on CoJ Billing = %

MRQC System Report

16 % NRW % reduction of the three components of NRW, including physical (real) losses, commercial (apparent) losses and authorised unbilled metered and non-metered consumption

Using sum of prior 12 month moving data (A),Total System Input Volume (B), Billed Metered Consumption(C), Billed Unmetered Consumption (D),Unbilled Unmetered Consumption (E), (A – B -C)/A*100= % NRW (F), (A –B –C –D/A*100 =% Water Losses (G), (28%*F)/A*100= % Apparent Losses (Commercial Losses)(H), F -G= % Real Losses (Physical Losses) (I) D/A*100 = % Unbilled Unmetered Consumption (Commercial Losses) (J), G+I = % Commercial Losses

CoJ zonal water balance Excel calculationsheet

17 Rand net profit before bad debt provision

Bad debts are accounts receivable thata business cannot collect. The provision is used to estimate bad debts which businesses incur because customers sometimes cannot pay their bills on time, or at all. Bad debt provisions are recorded as an expense on the income statement; reduce the net profit as an allowancefor doubtful debts which in turn reduce accounts receivable on the balance sheet

Net profit + bad debt provision Annual Financial Statements

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Ref # KPI Definition KPI Calculation Formula Means of Verification18 Audit opinion The financial statements are free from

material misstatements (in other words,a financially unqualified audit opinion) and there are no material findings on reporting on performance objectives or non-compliance with legislation

N/A AGSA Report

19 Number of business units fully deployed with Business Analytics Dashboard

Develop Digital Dashboards for business units

There is no KPI calculation formula for the item. Each dashboard, however, will be constructed on business unit KPIs which will be used to track and monitor in respect of the dashboard implementation

A dashboard for the business unit targeted. There will be a specification document and a project plan. The specification document will consist of KPIs for each business unit.

20 % female employees at elementary levels (Grades A1–C2)

Total female employees as a % of the total staff complement as at the end of the year and every quarter in the elementary/semi-skilled occupations designated at Grades A1–C2

No of female employees Grade A1–C2/ total staff complement Grades A1–C2

SAP HRIM system reports

21 % staff designated as PWD

The total number of people living with disabilities employed by the Company as a % of the total staff complement of the Company as at the end of the year and every quarter

No. of people living with disabilities employed/total staff complement


22 Total average training hours per person spent on formal training events

Average training hours per person spent on formal training events away from the workplace

Total number of hours recorded in SAP HRIM for the quarter/year divided by the average staff complement for the period under review


23 NOSA star rating achievement

OHS Compliance through NOSA star rating N/A – report directly from the accreditation agency (NOSA)

Report from the accreditation agency (NOSA)

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annexure D: Financials

JOHANNESBuRG WATER (SOC) LIMITED

DASHBOARD OF KEY INFORMATION FOR THE YEARS 2017 TO 2021

R’000 ACTuAL2016/17

ORIGINAL BuDGET2017/18

ADJuSTED2017/18

BuDGET

2018/19 2019/20 2020/21

CPIx % 5.1% 6.2% 5.9% 5.4% 5.4% 5.9%

Tariff Rate % 13.2% 12.2% 12.20% 14.2% 7.4% 7.9%

Tariff Rate - Cost of Sales % 11.9% 10.2% 10.20% 12.2% 7.4% 7.9%

Revenue 8,593,582 10,754,464 10,324,912 11,687,905 12,660,806 13,544,481

Salary Increases % 5.8% 7.2% 7.20% 6.1% 6.1% 6.4%

Capex - Funding Sources 637,649 795,006 715,005 900,640 1,251,432 985,450

Grant Funded Capex (USDG) 69,850 245,183 245,183 203,704 196,907 186,970

External (COJ) 445,769 148,770 139,770 499,440 563,342 393,169

Own funding / BSC 122,030 401,053 330,052 197,496 491,183 405,311

Cash Position 216,369 398,128 214,841 329,979 555,531 643,614

Profit 291,337 1,500,812 1,141,959 1,476,794 1,623,096 1,796,647

Payment Level (Total) % 83.3% 85.8% 85.8% 84.7% 84.9% 85.3%

Profit Before Bad Debt Provision 2,196,363 3,046,060 2,687,207 2,956,883 3,212,329 3,510,926

Interest Charges 185,788 336,811 336,811 364,535 384,220 406,730

Profit Before Capital Transfers 220,826 1,255,629 896,776 1,273,090 1,426,189 1,609,677

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STATEMENT OF FINANCIAL PERFORMANCE

R’000 ACTuAL2016/17

APPROvED BuDGET2017/18

ADJuSTMENTS2017/18

ADJuSTED BuDGET

APPROvED BuDGET

2018/19 2019/20 2020/21RevenuesOperating Income Generated 8,593,582 10,754,464 (429,552) 10,324,912 11,687,905 12,552,810 13,544,481 Service charges - water revenue from tariff billings 8,593,582 10,754,464 (429,552) 10,324,912 11,687,905 12,552,810 13,543,402

Cost of Sales (4,259,064) (4,915,210) - (4,915,210) (5,624,094) (6,040,277) (6,517,460)Bulk Purchases - Water (4,259,064) (4,915,210) (4,915,210) (5,624,094) (6,040,277) (6,517,460)Gross margin 4,334,518 5,839,254 (429,552) 5,409,702 6,063,810 6,512,532 7,027,021 Gross Profit Margin % 50.4% 54.3% 100.0% 52.4% 51.9% 51.9% 51,9%

Other Income 418,585 245,183 - 245,183 203,704 196,907 186,970 Other revenue 348,073 - - - - - Deferred income release 70,511 245,183 - 245,183 203,704 196,907 186,970

CoJ Operating grants & subsidies - - - - - - -

Expenditure (4,275,978) (4,350,667) 70,699 (4,279,968) (4,578,989) (4,863,178) (5,180,366)Employee Related Costs - Wages & Salaries (933,878) (986,587) (3,763) (990,350) (1,080,882) (1,146,468) (1,219,806)Contracted Services (425,260) (560,363) 37,211 (523,152) (653,188) (688,460) (725,500)CoJ Service fee (202,728) (215,759) (215,759) (227,626) (239,918) (254,073)Gen. Expenses - Other (510,194) (713,908) 32,050 (681,858) (789,007) (832,103) (879,892)Repairs & Maintenance (12,715) (36,756) 5,201 (31,555) (36,288) (38,245) (40,310)Depreciation (286,177) (292,046) (292,046) (311,909) (328,752) (346,505)Contributions - Bad debts (1,905,026) (1,545,248) - (1,545,248) (1,480,089) (1,589,233) (1,714,279)

Profit/(Loss) before interest 477,125 1,733,770 (358,853) 1,374,917 1,688,526 1,846,261 2,033,625

Net interest & sundry items (185,788) (232,958) - (232,958) (211,732) (223,165) (236,978)Interest income - Internal (CoJ) 18,834 - - - - - - Interest income - External Bad debt 121,984 103,853 - 103,853 152,803 161,054 169,751 Interest on CoJ shareholder loans (16,019) (6,167) - (6,167) - - - Interest on Mirror conduit loans (275,107) (303,322) - (303,322) (334,412) (352,470) (373,266)Commercial interest payable (35,481) (27,322) - (27,322) (30,123) (31,749) (33,464)Sundry income / (expenses) - - - - - - -

Profit/(Loss) after finance costs, before FV adj 291,337 1,500,812 (358,853) 1,141,959 1,476,794 1,623,096 1,796,647 Taxation payable - - - - - - - Net Surplus/(Loss) for the year 291,337 1,500,812 (358,853) 1,141,959 1,476,794 1,623,096 1,796,647 IAS adjustments - - - - - - -Retained income for the period 291,337 1,500,812 (358,853) 1,141,959 1,476,794 1,623,096 1,796,647 Retained income at beginning of period 5,697,579 10,953,645 7,130,874 9,749,627 12,849,516 16,269,259 Prior year adjustments - - - - - - Retained income at end of period 5,988,916 12,454,457 (358,853) 8,272,833 11,226,421 14,472,612 18,065,906

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STATEMENT OF FINANCIAL POSITION

R’000 ACTuAL2016/17

CuRRENT F/Y APPROvED BuDGET2017/18Budget

2017/18Adjusted 2018/19 2019/20 2020/21

ASSETSNON CuRRENT ASSETS 10,060,720 10,450,751 10,370,751 10,974,852 11,567,494 12,249,976

Fixed assets (net book values) 10,060,720 10,450,751 10,370,751 10,974,852 11,567,494 12,249,976 Land and buildings 97,099 87,102 87,102 83,697 88,217 93,422 Plant & equipment 7,970,169 9,206,763 9,126,763 9,676,252 10,198,769 10,800,497 Furniture and fittings 7,971 5,213 5,213 5,474 5,770 6,110 Office Equipment 4,736 559 559 587 619 656 Other fixed assets 1,980,745 1,151,113 1,151,113 1,208,841 1,274,119 1,349,292 Other non-current assets - - - - - -Biological Assets - - - - - -Current assets 2,561,509 2,651,670 2,767,670 2,990,246 4,119,594 4,618,979 Service Debtors 7,410,630 6,918,727 7,118,727 8,011,623 8,423,989 9,056,282 Less: Provision for Bad Debts (5,346,628) (4,843,109) (4,743,109) (5,538,136) (5,056,792) (5,289,397)Sundry Debtors 22,582 16,771 16,771 17,677 18,631 19,730 Inventory 86,329 80,737 80,024 84,345 88,900 94,145 Cash and equivalents (CoJ Sweeping Account) 216,339 398,098 214,811 329,949 555,501 643,584 Cash and equivalents (Petty Cash) 30 30 30 30 30 30 CoJ 172,214 80,412 80,412 84,754 89,331 94,602 Other UACs of CoJ 12 4 4 4 4 4 Other current assets - - - - - -Total Employment of Capital 12,622,229 13,102,421 13,138,421 13,965,098 15,687,088 16,868,956

EQuITY AND LIABILITIESCapital and Reserves 6,022,670 7,744,082 7,744,082 9,220,876 10,843,972 12,640,619 Share capital and premium 1 1 1 1 1 1 Retained income 6,022,669 7,744,081 7,744,081 9,220,875 10,843,971 12,640,618 Non-Current Liabilities 2,750,572 2,648,194 2,648,194 1,714,924 1,832,852 1,182,805 Mirror Conduit External loans 2,326,129 2,210,605 2,210,605 1,301,605 1,424,926 809,356 Shareholder Loan - - - - - Other External loans 331,847 331,464 331,464 301,464 290,031 248,598 Deferred Income - - - - - Fleet lease obligation 12,461 19,951 19,951 21,029 22,164 23,472 Employee benefit obligations 80,134 86,173 86,173 90,826 95,731 101,379 Current liabilities 3,848,987 2,710,146 2,746,146 3,029,298 3,010,264 3,045,532 Trade creditors 716,174 575,358 611,358 751,463 777,012 807,316 Accruals and provisions 562,299 84,325 84,325 88,878 93,678 99,205 Consumer Deposits - Services 578,365 347,658 347,658 366,432 386,219 409,006 Value Added Tax (59,512) 48,296 48,296 50,904 53,653 56,818 CoJ 1,424,573 1,226,309 1,226,309 1,292,530 1,163,277 1,105,113 Other UACs of CoJ 8,090 11,103 11,103 11,702 12,334 13,062 Current portion of non-current liabiliites 613,586 410,642 410,642 460,586 516,921 547,419 Fleet lease obligation 5,412 6,454 6,454 6,802 7,169 7,592 Total equity and liabilities 12,622,229 13,102,421 13,138,421 13,965,098 15,687,088 16,868,956

City of Johannesburg

Johannesburg Water (SOC) Ltd

PR

ISBN:

17 Harrison Street

Marshalltown

Johannesburg

PO Box 61542

Johannesburg

South Africa

Phone: +27(0) 11 688 1400

Fax: +27(0) 11 688 1528

E-mail: [email protected]

24-hour Hotline: +27(0) 11 375 5555

Follow us on: @jhbwater

www.johannesburgwater.co.za

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