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PRESENTATION TO NCOP BY THE MEC LIMPOPO PROVINCIAL TREASURY 16 TH JANUARY 2006 _______________________________________________________ _____

PRESENTATION TO NCOP BY THE MEC LIMPOPO PROVINCIAL TREASURY 16 TH JANUARY 2006 ____________________________________________________________

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Page 1: PRESENTATION TO NCOP BY THE MEC LIMPOPO PROVINCIAL TREASURY 16 TH JANUARY 2006 ____________________________________________________________

PRESENTATION TO NCOPBY THE MEC

LIMPOPO PROVINCIAL TREASURY

16TH JANUARY 2006

____________________________________________________________

Page 2: PRESENTATION TO NCOP BY THE MEC LIMPOPO PROVINCIAL TREASURY 16 TH JANUARY 2006 ____________________________________________________________

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Conditional Grants spending at 30 November 2005

R'000 R'000 R'000 R'000 R'000

Education

HIV and AIDS (Life skills Education) 20,371 10,186 6,437 3,749 32%

National School Nutrition Programme 167,836 125,877 110,381 15,496 66%

188,207 136,063 116,818 19,245 62%

Health 0

Comprehensive HIV and AIDS 125,899 71,616 46,359 25,257 37%

Hospital Management and Quality Improvement 17,457 13,093 6,859 6,234 39%

Hospital Revitalization 212,918 141,946 70,456 71,490 33%

Integrated Nutrition Programme 22,344 16,758 11,423 5,335 51%

Health Professions Training and Development 72,411 48,272 47,910 362 66%

National Tertiary Services 71,182 47,454 20,434 27,020 29%

522,211 339,139 203,441 135,698 39%

Housing

Housing subsidy 397,650 284,757 212,629 72,128 53%

Human Settlement and Redevelopment 1,418 1,418 5,440 -4,022 384%

399,068 286,175 218,069 68,106 55%

Social Development

HIV and AIDS (Community Based Care) 9,138 8,224 6,580 1,644 72%

Social Assistance Admin Grant 500,000 333,328 230,638 102,690 46%

Social Assistance Transfers Grant 6,814,594 4,771,722 4,544,574 227,148 67%

Integrated Social Dev Grant 61,146 30,573 0 0 0%

7,384,878 5,143,847 4,781,792 331,482 65%

Provincial Infrastructure Grant

Health 92,526 46,263 24,247 22,016 26%

Agriculture 39,654 19,827 15,928 3,899 40%

Roads 264,359 132,180 109,004 23,176 41%

Education 264,359 132,180 116,318 15,862 44%

660,898 330,450 265,497 64,953 40%

Sport

Mass Sport and Recreation Participation Programme 2,670 2,234 1,832 402 69%

Agriculture

Comprehensive Agriculture Support Prog 41,786 33,429 22,419 11,010 54%

Land Care Programme Grant 5,000 4,000 2,595 1,405 52%

46,786 37,429 25,014 12,415 53%

Totals 9,204,718 6,275,337 5,612,463 632,301 61%

Spent as a % of budgetDepartment DoRA

Transferred from National to province

Provincial actual payments

Variance

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EDUCATION

• HIV/AIDS– The commitment is R10,117m which will

increase expenditure to R16,554m at the end of the financial year.

– Redesigning of the HIV/Aids Conditional Grant is being proposed in order to enhance impact.

• Primary School Nutrition Programme– This grant feeds about 1 400 000 school

children. The Department projects full utilisation of the grant by the end of the financial year.

Page 4: PRESENTATION TO NCOP BY THE MEC LIMPOPO PROVINCIAL TREASURY 16 TH JANUARY 2006 ____________________________________________________________

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Conditional Grants Actual expenditure as at 31 December 2005

of the financial year 2005 / 06

Budgeted over the MTEF in R '000Limpopo Health - Vote 7 April to % of

Conditional Grants DORA Roll over Total % Increase December budget

available above 04/05 Expenditure spent

Hospital Man & Quality Imp 17,457 4,387 21,844 13.4% 8,139 37.3%HIV&AIDS 125,899 8,103 134,002 62.6% 60,348 45.0%Intergrated Nutrition Prog 22,344 6,249 28,593 10.0% 15,971 55.9%National Tertiary Services 71,182 4,222 75,404 51.8% 21,683 28.8%Health Prof Train & Dev 72,411 72,411 39.8% 55,196 76.2%Cholera / Malaria - 2,718 2,718 0.0% 935 34.4%Hospital Rehabilitation 212,918 8,666 221,584 100.0% 79,588 35.9%Total Budget = DORA 522,211 34,345 556,556 53.2% 241,860 43.5%

2005/06

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Conditional Grants Actual expenditure as at 31 December 2005

Budgeted over the MTEF in R '000Limpopo Health - Vote 7 April to Expenditure Additional % of

Conditional Grants Total September December Expenditure budget

available Expenditure Total Last Quarter spent

Hospital Man & Quality Imp 21,844 4,414 8,139 3,725 37.3%HIV&AIDS 134,002 10,335 60,348 50,013 45.0%Intergrated Nutrition Prog 28,593 6,704 15,972 9,268 55.9%National Tertiary Services 75,404 14,862 21,683 6,821 28.8%Health Prof Train & Dev 72,411 36,101 55,196 19,095 76.2%Cholera / Malaria 2,718 - 934 934 34.4%Hospital Rehabilitation 221,584 33,975 79,588 45,613 35.9%Total Budget = DORA 556,556 106,391 241,860 135,469 43.5%

2005/06

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Conditional Grants

Expenditure 2005 / 06• The department has managed to increase the expenditure per quarter

as follows:– 6.27% = R40.67m in the first quarter – 22.1% = R 106.391m in the second quarter– 43.5 % = R 241 860 in the third quarter

• The inability of the department to secure Tenders for the purchase of Medical Equipment has resulted in limited expenditure to date on the following grants:

• Hospital Management and Quality Improvement at 37.26%, • National Tertiary Services at 28.76%

• The tenders for Medical Equipment was finalised in November and expenditure is expected to substantially increase in the last quarter as the business plans include the assets required.

• Equipment has been ordered and deliveries are awaited

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Conditional GrantsExpenditure - HIV & AIDS

• The business plans for HIV & AIDS was adjusted in an attempt to ensure that service delivery is speeded up, the revised plans were forwarded to National Health in November 2005.

• Some R20 million was transferred to NGO’s during October 2005, after proper screening the NGO’s ability to deliver on the part of the Comprehensive HIV&AIDS programme that they are expected to deliver service on.

• Personnel Expenditure is not expected to increase as health professional posts catered for are not being filled as anticipated = under spending of R 11 m or 8.2 %.

• Expenditure increased from 7.7 % in Sept. to 45.3 % in Dec 2005• The expenditure should be increased once a system to account for

medicines and tests used on HIV&AIDS related treatments in the hospitals is agreed upon.

• Identifying the medicines used for the treatment of Aids Patients remains to be a challenge as all medicines are procured at a central point on the equitable share and have to be journalised to capture the expenditure under the Conditional Grant.

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Conditional Grants

Expenditure and interventions - I N P• The participation on the National Tender RT 289 has not been

available to the department.• R 2 m for food supplements committed in November, purchased via

quotations.• R 1.5 m for equipment already delivered, invoices awaited.• An additional R 2 m for equipment has been ordered.• Future participation on RT 289 is being negotiated to streamline

procurement.• Vitamin A supplements (tablets) is being procured via the Pharmacy

Depot to comply to contract requirements including the Bar Coding, to the value of R 700 000 to year end.

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Conditional Grants

Expenditure and interventions - I N P cont.• The use of multi vitamins was also slowed down due to contract

requirements, R 1.5 m yet to be procured.• Skills development for food service management personnel to take

place in February 2006 for R 2 m and the programme will continue into the next financial year.

• Backlog of R 600 000 in Greenery projects in Bohlabela district due to un-availability of the system.

• R 3 m yet to be spent by year end on all Greenery projects.

HPTD Grant Expenditure on the HPTD Grant has been above the average and no problems is foreseen in spending the funds on service delivery in this regard, as equipment tenders are now in place.

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Conditional Grants

Expenditure and interventions HMQI

• The training of management is ongoing but availability of management for training over extended periods are restrictive.

• Personnel costs are below norm due to vacant posts.• The purchase of equipment R 2.8 m has not taken place-

– Computers– Filling systems - Delay in the implementation of the

Information and Records Management tender– Lack of equipment tender for medical equipment that

was only finalized in December

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Conditional Grants

Expenditure - NTSG• Purchase of equipment has been delayed due to the unavailability of a

tender that is now being finalised, has resulted in low expenditure patterns but an amount of R 32 m has since been committed.

• It is envisaged that the full budget for Equipment of R 46 m will be utilised

• Personnel costs for Specialists employed on the equitable share has been identified to be funded from this grant for the first three years of their employment and the Grant does carry these costs.

Expenditure - Cholera / Malaria The full amount of R 2.718 m received as a roll over will be spent during the year on-– Pesticides for Malaria control– Vehicles for Vector control have been ordered– In response to the recent instances of reported Malaria cases

R1.26m has been committed against the grant.

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Conditional Grants

Expenditure Hospital Revitalisation• The department surrendered R10 m to National Health with

a request to increase the allocation for the 2006/07 year with the same amount due to the projects being completed in the following financial year.

• This grant is fully committed but expenditure is dependant on the progress made by contractors.

• The capacity of emerging contractors together with the availability of building materials especially Building Bricks has been a constraint that impacts on the timeous completion of the current contracts

• Upgrading of the filing system at Revitalised Hospitals to the value of R 4.6 m has been ordered.

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Local Government

Housing Subsidy• Shortage of clay bricks in the province,

difficulties experienced by contractors in raising funding for the acquisition of materials for construction and delays in implementing contracts by developers contributed to the low levels of spending on the Housing Subsidy.

• Spending improved gradually and total spending is projected at R417.29 million which is 91.32%.

• 3 880 houses will be completed as at the 31 March 2006.

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Local Government (Con’t)

Human Settlement and Redevelopment Programme

• The overspending is as a result of the expenditure on projects whose budgets

were rolled over from 2004/05 to 2005/06

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Social Development

HIV/AIDS• The expenditure is high because the Department has

already transferred funds to 64 NGO’s for the smooth running of the programme. The transfers are in line with the Department’s planning.

Social Assistance Admin Grant• The underspending is as a result of the delay in filling of

posts identified as critical, and also on goods and services as a result of shared items, e.g. Stationery, telephone, water and electricity. South African Social Security Agency is currently housed within the Department of Health and Social Development.

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Social Development

Social Assistance Transfers Grant• A growth of 2% is projected and the actual

growth in our province is about 2.6%. Integrated Social Dev Grant• There is no actual expenditure to date due to the

delay of business plan approval. The delay was caused by the change of the conditions of the grant by National Department and identification of the projects to be funded. The business plan has now been approved and the expenditure will start to reflect in the third quarter.

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Sports, Arts and Culture

Mass Sport and Recreation Programme

• The underspending on the grant is due to the fact that new hubs were supposed to have been launched during November, but was postponed to February 2006. Grant will be fully utilised.

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Agriculture

Comprehensive Agricultural Support Programme (CASP)

• The underspending is due to limited capacity for infrastructure development and project registration in districts. There are numerous small projects that makes it difficult to manage.

Land Care Programme Grant

• The underspending is due to the delay in supply of fencing materials by suppliers. Orders were issued but payments could not be processed due to non delivery.

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Provincial Infrastructure Grant

R'000s 2005/06 Budget

Trfs from National Treasury

Amount Spent % Spent

Department

Education 264,359.00 132,180.00 116,318.00 44.0%Roads & Transport 264,359.00 132,180.00 109,004.00 41.2%Health & Social Development 92,526.00 46,263.00 24,247.51 26.2%Agriculture 39,654.00 19,827.00 15,928.00 40.2%

Total 660,898.00 330,450.00 265,497.51 40.2%

Table A1 - Provincial Infrastructure GrantNovember YTD

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PIG…

R'000s 2005/06 BudgetTrfs from National

Treasury Amount SpentProjections to

March 2006Total projected exp. At Y/End % Spent

Department

Education 264,359.00 132,180.00 116,318.00 148,041.00 264,359.00 100%Roads & Transport 264,359.00 132,180.00 109,004.00 155,355.00 264,359.00 100%Health & Social Development 92,526.00 46,263.00 24,247.51 59,267.00 83,514.51 90%Agriculture 39,654.00 19,827.00 15,928.00 17,777.90 33,705.90 85%

Total 660,898.00 330,450.00 265,497.51 380,440.90 645,938.41 98%

Table A2 - Provincial Infrastructure Grant (Nov YTD)(with projections to March 2006)

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Reasons for underspending (PIG)

• Total: Total spending on the grant is at 40.2% is projected to be at 98% by yearend.

• Education• Spending on the grant is at 44% of the grant.• It is expected the department will end the year at 100% of its budget

(including commitments at yearend). • The low expenditure to the end of September is due to projects

starting late (the departmental business plan was changed due a review of priorities, i.e. focus areas).

• Roads & Transport• 41.2% has been spent so far. Most of the big contracts were

awarded in September, spending is low as a result. (Spending has been picking up since September which stood at 14.8%).

• The department projects to spend all its budget.

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Reasons cont…• Health & Social Development• 26.2% of the grant has been spent so far. Spending on projects is dependant on

stages of completion of the projects and most of these started late. There were other project –related problems such as:

• 1. The late Appointments of Main & Sub Contractors.• 2. Project delays by the Implementing Agent, i.e. project implementation taking more

time than it should. • 3. Poor performance by the main Contractors. • The department projects an underspending of 10% of its budget (R9.0M).

• Agriculture • The department has spent 40.2% of the grant and this is due to the review of the

small-holder irrigation schemes that were targeted to benefit from the grant (during the review process, these projects were put on hold).

• With regard to fencing projects, supplier capacity for the poles to be used for fencing was overstretched, with the major suppliers being affected, leading to further delays in project starting times.

• The department will underspend its budget by 15% (R5.9M).

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Intervention strategies (PIG)

• Health & Social Dev.• The department has adopted a proactive

approach in project management, e.g. the project documentation stages are started earlier in order to pre-empt delays in tendering, etc.

• Most of the grant is used for clinic projects (33 projects, most of these have just started and some will start in Feb – ave. cost per clinic R3M).

• The department is unlikely to spend its full PIG budget in this financial year and could end the year at around 90% of its budget.

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Intervention strategies…

• Education

• The department is identifying projects for fasttracking and this will boost expenditure (almost all the budget is already committed).

• (NOTE: There could be some amounts that are not PAID but committed by yearend).

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Cont…

• Agriculture• The department is unlikely to spend its full PIG

budget and will end the year at around 85% of the budget (underspending of R5.9M).

• Roads & Transport• Engineers from the Roads Agency are currently

assessing the projects in the province and identifying fast-moving projects and reallocating funds to these in order to eliminate the risk of underspending.

Page 26: PRESENTATION TO NCOP BY THE MEC LIMPOPO PROVINCIAL TREASURY 16 TH JANUARY 2006 ____________________________________________________________

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Total Infrastructure Budget

R'000s

2005/06 Budget - Main Appropriation Roll-overs

Unforseable/Unavoidable Virements

Other adjustments

Total Additional

Appropriation

Adjusted Appropriatio

n

Department

Education 455,909 40,694 - (22,748) - 17,946 473,855

Roads & Transport 661,817 - - - 170,000 170,000 831,817

Health & Social Development 433,891 8,666 - (7,597) (10,000) (8,931) 424,960

Agriculture 208,614 42,575 - (14,374) 28,201 236,815

Total 1,760,231 91,935 - 145,626 237,561 1,967,447

Additional Appropriation

Table C1 - Total Budget

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Total Nov YTD Spending

R'000s Total Budget Exp. To Nov. Variance % Spent

Department

Education 473,855.00 216,396.00 257,459 45.7%Roads & Transport 831,817.00 279,651.00 552,166 33.6%Health & Social Development 424,960.00 108,721.00 316,239 25.6%Agriculture 236,815.00 70,208.00 166,607 29.6%

Total 1,967,447.00 674,976.00 1,292,471 34.3%

Table C2 - NOV YTD Exp (Inc. Provincial Infrastructure Grant)

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Total Spending…cont

R'000s Total Budget Exp. To Nov.Projections to

Mar 06Total Exp. At

Y/End % Spent

Department

Education 473,855.00 216,396.00 257,459.00 473,855.00 100.0%Roads & Transport 831,817.00 279,651.00 552,166.00 831,817.00 100.0%Health & Social Development 424,960.00 108,721.00 273,743.00 382,464.00 90.0%Agriculture 236,815.00 70,208.00 131,000.00 201,208.00 85.0%

Total 1,967,447.00 674,976.00 1,214,368.00 1,889,344.00 96.0%

Table C3 - NOV YTD Capital Exp (Inc. Provincial Infrastructure Grant)(with projections to yearend)

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Total budget – reasons for underspending

• Total: Total capital spending (incl. PIG) is at 34.3% and is projected to be at 96% by yearend).

• Roads & Transport• Most of the big contracts were awarded in

September. • Education• Projects started late due to a review in priorities

(which impacted on the business plan, i.e. it was changed).

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Agric…reasons

• Lack of skills to undertake technical infrastructure planning functions, e.g. the inability to compile the bills of quantities required for the projects.

• Progress on projects has been delayed by the demand planning processes whereby a certain level of technical expertise, e.g. engineering is inadequate to expedite most projects.

• With regard to fencing projects, supplier capacity for the poles to be used for fencing was overstretched, with the major suppliers being affected, leading to further delays in project starting times.

Page 31: PRESENTATION TO NCOP BY THE MEC LIMPOPO PROVINCIAL TREASURY 16 TH JANUARY 2006 ____________________________________________________________

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Agric..reasons

• The decentralization process of both the planning and financial processes of several programs to the Districts affected CASP as District Senior Managers had to take full charge of the several programs with inadequate capacity.

• Most districts did not develop detailed project implementation plans on time and as such this led to a slow start for some of the projects.

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Agric…reasons

• In order to boost project performance and delivery, the department has:

• Developed a Project Database which will improve the monitoring of the projects.

• Initiated the buying of materials for fencing in bulk.

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Health & Soc. Dev• Reasons that contributed to delays are the following:• For 15 of the main contracts, contractors went on site from the 15th

of July, which negatively affected spending.• Delays on supply of medical equipment for the hospital projects,

orders were issued in April 2005 but to due to delays in delivery, no payments were made for these projects in the 1st Quarter of 2005/06.

• Spending on clinics (both new construction and upgrades), health centres and mortuaries was also hampered by delays in the documentation phase of project implementation (e.g. tender evaluations, etc in line with the Construction Industry Development Board (CIDB) guidelines which require contractors to be registered and categorised per amount of project that they can undertake).

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Health…

• The department is also taking proactive measures to ensure that delays are minimized, e.g. by appointing contractors early and having them take site before the scheduled departmental project starting time.

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Health & Soc. Dev• Reasons that contributed to delays are the following:• For 15 of the main contracts, contractors went on site from the 15th

of July, which negatively affected spending.• Delays on supply of medical equipment for the hospital projects,

orders were issued in April 2005 but to due to delays in delivery, no payments were made for these projects in the 1st Quarter of 2005/06.

• Spending on clinics (both new construction and upgrades), health centres and mortuaries was also hampered by delays in the documentation phase of project implementation (e.g. tender evaluations, etc in line with the Construction Industry Development Board (CIDB) guidelines which require contractors to be registered and categorised per amount of project that they can undertake).

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Health…

• The department is also taking proactive measures to ensure that delays are minimized, e.g. by appointing contractors early and having them take site before the scheduled departmental project starting time.

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Possible risks of underspending• Education• Projects will be fasttracked to avert underspending. By yearend all the

money will be committed.• Agriculture• This sector will underspend its budget by 15% (R35.6M).• Health & Social Development• This sector will spend about 90% of its budget (underspending of R42.5M)• There are 33 clinic project at a cost of R3M each which have just started.

Some of the projects will start in Feb which will impact on spending.• Roads & Transport• The full budget will be spent. • About R179M was spent in Dec.• With the balance spent as follows: about R100M in Jan, about R100M in

Feb and the balance, about R250M in March.• Rain could derail projects in other areas but the department is proactively

moving funds to projects that are not affected by rain.

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The End