Windsorton/Holpan Regional Bulk Water Supply Scheme

DIKGATLONG MUNICIPALITY

Windsorton/Holpan Regional Bulk Water

Supply Scheme

Implementation Readiness Report

October 2014

FINAL DRAFT

Document Number 225730YN0/Final Draft01

COMPILED FOR: COMPILED BY:

Dikgatlong Municipality WorleyParsons RSA (Pty) Ltd Private Bag X5 Contact person: E Deysel BARKLY WEST 4 Sidney Street Kimberley 8375 PO Box 183, Kimberley, 8301 South Africa Tel No : +27 (0) 53 531 0671 Telephone: +27 (0)53 831 4199 Fax No: +27 (0) 53 531 0624 Facsimile: +27 (0)53 831 4199 email: [email protected]

DIKGATLONG MUNICIPALITY

Disclaimer

This report has been prepared on behalf of and for the exclusive use of Dikgatlong Municipality, and is subject to and issued in accordance with the agreement between Dikgatlong Municipality and WorleyParsons RSA. WorleyParsons RSA accepts no liability or responsibility whatsoever for it in respect of any use of or reliance upon this report by any third party.

Copying this report without the permission of Dikgatlong Municipality and WorleyParsons RSA is not permitted.

PROJECT 225730 - IMPLEMENTATION READINESS REPORT - WINDSORTON/HOLPAN REGIONAL BULK WATER SUPPLY SCHEME

WORLEY- CLIENT REV DESCRIPTION ORIG REVIEW PARSONS DATE DATE APPROVAL APPROVAL Issued for internal review E Deysel F van N/A 2014-10-06 N/A Loggerenberg

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DIKGATLONG MUNICIPALITY

IMPLEMENTATION READINESS REPORT - WINDSORTON/HOLPAN REGIONAL BULK WATER SUPPLY SCHEME

EXECUTIVE SUMMARY

The primary objective of this report is to illustrate how the proposed upgrading of the Windsorton WTW and the establishment of a bulk water supply line to Holpan meets the prescribed requirements to qualify for RBIG funding. The Dikgatlong Municipality is applying for RBIG funding to co-fund the capital cost associated to the project.

The upgrading of the Windsorton WTW and the construction of the bulk water supply pipeline to Holpan is seen as an essential service that the Dikgatlong Municipality has to supply to the two communities. As the current WTW is being operated at full capacity, the risk of not supplying good quality water is increasing daily. The sustainability of the groundwater source supplying Holpan during drought periods is not defined. The project is also in line with the strategic planning documentation including the Reconciliation Strategy and the IDP.

The estimated total cost of the project is R 43 850 618.38 (including VAT). The cost per capita, based on the estimated future population of 8 501, is R 5 158.30 per person and the unit cost of the potable water is R 7.00 /kℓ, which compares favourably with industry guidelines.

Based on the norms, number of indigents, associated users and enabling economic environment the social component of the project was calculated as 72.94%. The social component of the project is thus calculated as R 31 984 641.05 (including VAT).The social component will be funded through DWAS RBIG programme and counter funded to an amount of R 11 865 977.33 (VAT included) by the Dikgatlong Municipality.

An amount of R 16 500 000.00 was approved for the 2015/2016 financial year by DWS and it is expected that the deficit will be funded by DWS in the following financial year. The Municipality will provide the balance of the project funds. The funding agreement will be finalized once DWS has confirmed their contribution to the project through the RBIG program.

The proposed activities in the scope of works do not constitute a listed activity in terms of Government Notice No R386 and therefore no environmental authorization is required.

The Dikgatlong Municipality is the owner of the property on which the existing and proposed upgraded WTW are located, and there is no land ownership or other legal issues have to be resolved in this regard. Permission has been obtained from the Department of Transport, Roads and Public Works to cross road R347 and construct a rising main pipe line inside the road reserve.

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The intent of all parties involved with this infrastructure development is to provide a cost effective solution in terms of construction as well as operating costs. As such the technical design proposed is the best suited to deliver quality potable water to the Windsorton and Holpan communities incorporating the client’s operational and maintenance requirements.

Following the completion of this study it is proposed that the “Windsorton/Holpan Regional Bulk Supply Scheme” project is approved to be implementation ready and that it qualifies for RBIG funding in terms of DWS requirements.

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LIST OF ABBREVIATIONS

AADD Average Annual Daily Demand BEE Black Economic Empowerment CoGTA Cooperative Governance and Traditional Affairs DEADP Department of Environmental Affairs and Development Planning Dia Diameter DM District Municipality DWS Department of Water and Sanitation EIA Environmental Impact Assessment EMP Environmental Management Plan GDPR Regional Gross Domestic Product IDP Integrated Development Plan Kℓ Kiloliter LM Local Municipality LOS Level of Service NRW Non-Revenue Water MoA Memorandum of Agreement O&M Operation and Maintenance PSP Private Service Provider RBIG Regional Bulk Infrastructure Grant ROD Record of Decision SANS South African National Standards SMME Small, Medium and Micro Enterprises TSE Treated Sewage Effluent WCDM Water Conservation and Demand Management WULA Water Use License Application WSDP Water Services Development Plan WTW Water treatment works WWTW Waste water treatment works

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DIKGATLONG MUNICIPALITY IMPLEMENTATION READINESS REPORT - WINDSORTON/HOLPAN REGIONAL BULK WATER SUPPLY SCHEME

CONTENTS

1 INTRODUCTION...... 11

1.1 BACKGROUND ...... 11

1.2 STUDY AREA ...... 12

1.3 STUDY PURPOSE AND OBJECTIVES ...... 12

2 STRATEGIC AND PLANNING ISSUES ...... 13

2.1 ALIGNMENT WITH IDP AND WSDP ...... 13

2.2 Water supply chain ...... 13

2.3 STRATEGIC IMPORTANCE AND DELIVERY TARGETS ...... 14

2.4 Agreement of parties ...... 18

2.5 Level of service ...... 18

2.6 Economic growth requirements ...... 19

2.7 Water scarcity ...... 19

2.8 FUNCTIONAL CRITICALITY OF TOTAL SCHEME AND SPECIFIC COMPONENTS 19

2.9 EXTENT OF COST ...... 21

2.10 AVAILABILITY OF CO-FUNDING ...... 25

3 THE SOCIAL CRITERIA ...... 26

3.1 Number of households and people to be uplifted to basic and higher service levels 26

3.2 Number of poor households to be served ...... 39

3.3 Estimated number of jobs to be created ...... 47

3.4 Affordability of the proposed water tariffs ...... 49

3.5 Contribution towards poverty eradication, social upliftment and health...... 53

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3.6 Number of associated services benefiting ...... 56

3.7 Socio-political support for the proposed development ...... 58

3.8 Social component...... 59

4 ECONOMIC CRITERIA ...... 65

4.1 Number of businesses and industries to be served ...... 65

4.2 Expected economic value to be generated by new business ...... 66

4.3 Number of SMMEs and BEE enterprises to benefit from project ...... 76

4.4 Regional economic benefit from proposed project ...... 78

5 TECHNICAL CRITERIA ...... 87

5.1 MASTER PLAN PROPOSAL ...... 87

5.2 APPROPRIATENESS AND ACCEPTABILITY OF THE SOLUTION ...... 87

5.3 Optimal Choice of bulk infrastructure ...... 94

5.4 APPROPRIATE WATER RESOURCE CHOICE & ADEQUATE WATER ALLOCATION 97

5.5 COMPLIANCE TO WATER DEMAND/WATER CONSERVATION OBJECTIVES98

5.6 OPTIMAL CHOICE OF BULK INFRASTRUCTURE ...... 98

5.7 PROOF OF BEST SUITED TECHNOLOGY ...... 99

6 INSTITUTIONAL CRITERIA ...... 100

6.1 INFRASTRUCTURE OWNERSHIP ...... 102

6.2 Agreements on infrastructure ownership ...... 102

6.3 Agreement on Implementation responsibility ...... 103

6.4 Confidence in the capacity of the institution to Implement ...... 103

6.5 Proof of Implementation Capacity ...... 111

6.6 OPERATIONAL AND MAINTENANCE RESPONSIBILITY ...... 113

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6.7 ROOF OF ADEQUATE STAFF NUMBERS AND SKILLS LEVELS ...... 115

6.8 History on water services interruptions ...... 116

6.9 COOPERATION AGREEMENT BETWEEN KEY STAKEHOLDERS ...... 116

6.10 WATER CONSERVATION AND DEMAND MANAGEMENT PERFORMANCE117

6.11 Commitments by institutional leadership ...... 117

6.12 Approval of institutional arrangements ...... 118

6.13 Cost recovery system ...... 119

6.14 Responsibility and accountability ...... 119

7 FINANCIAL CRITERIA ...... 120

7.1 AVAILABLE FUNDING ...... 120

7.2 FUNDING CONDITIONS ...... 120

8 LEGAL CRITERIA ...... 121

8.1 APPROVED WATER LICENSE ...... 121

8.2 Environmental Authorization for Construction of Scheme ...... 121

8.3 LAND AND PROPERTY RIGHTS ...... 122

9 SUSTAINABILITY CRITERIA ...... 123

9.1 FINANCIAL VIABILITY ...... 123

9.2 OPERATING AND MANAGEMENT CAPACITY, PERFORMANCE AND COMMITMENT ...... 124

9.3 ENVIRONMENTAL AND SOCIAL ACCEPTABILITY AND IMPACT ...... 124

10 CONCLUSION ...... 125

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LIST OF TABLES

Table 1. Estimated project Cost ...... 22

Table 2. Operational and Maintenance Cost ...... 23

Table 3. Unit cost per Kℓ (including VAT) ...... 24

Table 4. Cost estimate comparison to Industry Guide to Infrastructure ...... 25

Table 5. Housing needs in the Dikgatlong Municipality ...... 29

Table 6. Historical population and household growth ...... 30

Table 7. Status of water supply ...... 36

Table 8. Status of sanitation supply ...... 37

Table 9. Household income per annum 2007 ...... 40

Table 10. Number of persons receiving grants ...... 41

Table 11. Type of dwelling in 2011 ...... 42

Table 12. Dwelling ownership ...... 43

Table 13. Household income distribution per annum 2001 and 2011 (Cumulative percentage is the percentage of households that had incomes of less than 2 state old age grants) ...... 45

Table 14. Household income in Holpan from Balelapa household profiling 2011 ...... 47

Table 15. Construction employment on Holpan/Windsorton project based on MIG data ...... 48

Table 16. Minimum number of person to be employed for the operation of a water care work49

Table 17. Assumptions and calculations of water affordability 2012/13 ...... 52

Table 18. Schools in the study area ...... 57

Table 19. MIG projects registered ...... 58

Table 20. Water supply parameters for indigent households ...... 61

Table 21. Norms used in the water allocation per category ...... 63

Table 22. Calculation of the social component ...... 64

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Table 23. Estimated operation and maintenance costs of the project ...... 67

Table 24. Macroeconomic effects of a 10% increase in water infrastructure ...... 74

Table 25. Employment status 2011 ...... 80

Table 26. Northern Cape employed by industry ...... 81

Table 27. Percentage contribution to Gross Value Added 2010 (in R’000 and constant 2005 prices) 82

Table 28. Yield test results - SRK Study ...... 90

Table 29. Infrastructure capacity vs. demand ...... 91

Table 30. Friction Coefficients ...... 95

LIST OF FIGURES

Figure 1. Dikgatlong Municipality Locality Map ...... 11

Figure 2. Dwelling counts 2010 ...... 31

Figure 3. Map illustrates north-eastern wards of Delportshoop that lies in ward 5 with Holpan 32

Figure 4. Google Earth image of Holpan, January 2008 ...... 32

Figure 5. Dikgatlong ward boundaries and location of settlements ...... 33

Figure 6. Holpan population estimates to 2030 ...... 34

Figure 7. Windsorton population estimates to 2030 ...... 35

Figure 8. Meeting MDGs at Dikgatlong ...... 39

Figure 9. Household income distribution ...... 40

Figure 10. Indigent households 2001 and 2011 ...... 45

Figure 11. Domestic water tariffs ...... 51

Figure 12. How to calculate the social component ...... 61

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Figure 13. Labour multipliers ...... 68

Figure 14. Employment based on labour multipliers of the electricity, water and gas sector applied to the operation and maintenance phase of the project ...... 69

Figure 15. Production multipliers ...... 70

Figure 16. Estimated production multipliers of the operation and maintenance phase of the project 71

Figure 17. Value added multipliers ...... 72

Figure 18. Value added per R1 million, water, gas and electricity spending ...... 73

Figure 19. SMME, BEE and local labour target estimates for the project ...... 78

Figure 20. Sector of employment 2007 in Dikgatlong ...... 81

Figure 21. Sector contribution to gross value added 2010 in Dikgatlong ...... 83

Figure 22. Contribution of municipalities to the Northern Cape GDP 2010 ...... 84

Figure 23. Dikgatlong’s growth in GVA 1996-2010 compared to the Northern Cape average .. 85

Figure 24. Growth in Dikgatlong's GDP to 2030 ...... 86

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APPENDICES

Annexure A. Dikgatlong Municipality. Final IDP document 2012-2013

Annexure B. Windsorton & Holpan Social And Economic Criteria Report of The Implementation Ready Study

Annexure C. Dikgatlong Water Services Development Plan

Annexure D. Reconciliation Strategy for Windsorton Town in Dikgatlong Local Municipality in the Lower Vaal WMA

Annexure E. Dikgatlong Municipality Blue Drop Assessment Report

Annexure F. Windsorton/Holpan Regional Bulk Water Supply Scheme – Technical Feasibility Report

Annexure G. Holpan Bulk Water Supply - Towards the development of an Institutional Framework

Annexure H. Council Resolution regarding the Ownership and O&M of Scheme

Annexure I. Environmental Approval

Annexure J. Permission to cross Road R347

Annexure K. Vaalharts Water User Associations Permit

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1 INTRODUCTION

1.1 BACKGROUND

Windsorton and Holpan are both small settlements within Dikgatlong Municipality which falls within the Frances Baard District Municipality in the Northern Cape Province. Windsorton, with a population of approximately 6 250 (2011), is situated next to the MR913, 75 km north of Kimberley, on the embankment of the Vaal River. Holpan, with an approximate population of 798 (2011), is situated next to DR3375, approximately 70 km North of Kimberley (15 km south of Windsorton).

Windsorton receives its raw water from the Vaal River, via the Vaalharts Macro Water Scheme whilst Holpan is reliant on groundwater as its only water source.

The existing Windsorton water treatment works (WTW) is operating at full capacity during peak demands. The existing hydraulic capacity of the WTW is therefore not able to meet the current demand during summer months and will need to be upgraded in order to supply the increased demand.

The existing production boreholes providing Holpan with potable water are unable to meet the current demand especially during drought periods.

Figure 1. Dikgatlong Municipality Locality Map

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1.2 STUDY AREA

The study area concerns the towns of Holpan that requires a water supply from the Windsorton WTW via a bulk pipeline and Windsorton that requires an upgrading of its WTW and bulk storage facility.

The Windsorton WTW and bulk water storage facility is located east of the Vaalharts’ Klipdam – Barkly (KB) canal from which raw water is abstracted and adjacent to the MR913 provincial road. Holpan is situated next to DR3375 approximately 15 km south of Windsorton. The three boreholes (HP1, HP2 & HP03I) from which Holpan receives water are located within a radius of 1.2 km from the village.

The proposed bulk water supply pipeline will be constructed next to the R374 in a westerly direction for approximately 6 km where it meets the R371 and then in a south easterly direction and follow the R371 for approximately 4 km to Holpan bulk storage facility.

1.3 STUDY PURPOSE AND OBJECTIVES

The focus of this report is to provide the required information, as requested by the Department of Water Affairs’ (DWS) Regional Bulk Infrastructure Grant (RBIG) program, to apply for a grant from DWS. The grant is required by the Dikgatlong Municipality to counter fund the Holpan Bulk Water Scheme project’s cost.

This report addresses strategic and planning issues, social, economic, technical, institutional, financial, legal criteria and sustainability criteria.

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2 STRATEGIC AND PLANNING ISSUES

2.1 ALIGNMENT WITH IDP AND WSDP

A bulk infrastructure project must be aligned with and listed in the Integrated Development Plans (IDP) and Water Services Development Plans (WSDP) of the participating municipalities.1

The bulk water supply project to Holpan is a listed project in the 2012/13 Dikgatlong IDP. It is priority number 5 of the water projects.2 The development of Holpan is listed in the 2012/13 IDP and includes provision of sanitation, electricity, serviced and registered stands, cemetery, community hall, sport facilities, and municipal offices.

Refer to the following sources:

 Dikgatlong Municipality Integrated Development Plan 2012/2013 attached Annexure A.

 Social and Economic Criteria Report of The Implementation Ready Study attached as Annexure B.

2.2 WATER SUPPLY CHAIN

The proposed Windsorton/Holpan Bulk Water Supply Scheme includes three main components namely to increase the WTW capacity and by doing so refurbish the existing works, to increase the bulk storage facility at Windsorton and to construct a bulk water supply pipeline from the Windsorton WTW to Holpan. The potable water supplied from the Windsorton WTW to Holpan will substitute the vulnerable existing groundwater source i.e. boreholes. No additional water source has to be developed for Holpan.

Raw water to Windsorton is supplied from the Vaal River by means of the Vaalharts Water’s KB canal. The KB canal supplies raw water to several farms in its vicinity.

1 Dept. of Water Affairs (2011) Water services regional bulk infrastructure programme – Framework for implementation. Version V10, January 2011.P27 2 Dikgatlong Municipality. Integrated Development Plan 2012/2013. P 10.

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Maintenance work on the canal causes water supply disruptions at least 4 times a year for a period of approximately two weeks per occurrence.

The existing Holpan production boreholes (HP1 and HP2) deliver 0.45ℓ/s and 0.40ℓ/s respectively for 8 hours per day. A third production borehole (HP03I) was recently developed and equipped with a safe yield of 7.0ℓ/s for 8 hours per day.

A study conducted by SRK Consulting Engineers and Scientists indicated that the total yield of the groundwater source in the vicinity of Holpan is 321 m³/day (188 160 m³/a). Although it seems that the groundwater source would be able to meet the 2030 AADD of Holpan, which is 117 m³/day (42 705m³/a), the source cannot be guaranteed because of the increasing mining and agricultural activities which utilize the same aquifer.

2.3 STRATEGIC IMPORTANCE AND DELIVERY TARGETS

This project will contribute to poverty eradication upliftment and economic growth in many ways. The project will strengthen the local economies with the direct capital investment and socio-economic benefits, whilst providing jobs during the construction and operation and maintenance phases. This infrastructure will have a major stimulus on:

 Providing Basic Services to the Community

 Supporting economic growth and developments

 Address water scarcity and drought

 New infrastructure to improve water services quality

The Framework for Implementation of bulk regional projects sets out drivers of regional bulk infrastructure, which includes:3

3 Dept. of Water Affairs (2011) Water services regional bulk infrastructure programme – Framework for implementation. Version V10, January 2011.P. 11.

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2.3.1 Providing Basic Services to the Community

No water backlogs exist in Holpan, while a majority of the Municipality’s backlogs are in Windsorton. In addition, the desire for higher level of services is noted. Although the impact of climate change is debatable, it appears that global warming will have some measurable impact on future water supplies.

Many water resource planners acknowledge this risk but do not yet explicitly incorporate it into plans. This may be due to a number of factors, including relatively short planning horizons and wide variability, and perceived low reliability of estimates of potential impacts.

The assumption is that global warming, or climate change will reduce available yield of groundwater and surface water, although its impact is likely to be relatively small over the next 50 to 60 years. However, there needs to be some allowance for the possibility that its impact may be greater than anticipated. The effects of climate change are compounded by poor land use management that affects run-off, groundwater recharge, siltation of dams, rivers and estuaries and eco-system health. The water sector needs to manage this to ensure a reliable water supply for social and economic purposes.4

2.3.2 Supporting economic growth and developments

Bulk infrastructure must serve both economic and social needs. The expansion of mining activities needs to be supported and municipal services need to be provided to employees.

This project will contribute to poverty reduction, increase levels of service, uplift and stimulate economic growth because it will have a major stimulus on:

 the water service provider’s business

 socio-economic benefits resulting from a quality water services and waste water quality that is compliant to standards

4 Department of Water Affairs and Forestry (2008) Strategic framework for sustainable growth and development – A discussion document. May 2008. P.3.

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 construction with impacts on spending, employment, and taxes and in its operational phase, including its multiplier effects

 supporting the expansion of the mining industry by providing needed municipal services

Usually, construction works associated with large infrastructure projects are seen as generating major benefits for local communities in terms of increased employment and expenditure within the region. The proposed project presents opportunities for low and semi-skilled local labour during construction.

After the completion of construction, at least one person will be required to oversee the operation and maintenance of the pipeline and the distribution of water at Holpan. Such increased employment, combined with increased income, will positively affect the local economy and have an effect on reducing poverty. Buying power in the area will be increased and thus there will be the opportunity for new business establishments, which in turn will create more jobs.

The contribution of water to the economy in terms of output growth, remuneration and household income generation reveals that for every Rand invested in the improvement of the water sector, output grows by approximately R6.67; payments to primary production sectors increase by R1.49; and another R1.01 is contributed to household income.5 While providing water does not necessarily result in economic growth, a lack of water or poor water quality can and does inhibit growth. The challenge of the water sector is to align the provision of water with the spatial and sectorial growth of the economy.6 Water infrastructure is an intermediate input and its efficient reliable supply raises the profitability of production and thus enhances the marginal productivity of labour and capital. Substantial number of hours without water has a negative effect on productivity.

It is anticipated that the project will result in a decrease in water shortages, which in turn should decrease the risk to entrepreneurs and improve healthy living conditions.

5 Juana, J.S. 2008. Efficiency and equity considerations in modelling inter-sectoral water demand in South Africa. Thesis. University of Pretoria. February 2008. 6 Department of Water Affairs and Forestry (2008) Strategic framework for sustainable growth and development – A discussion document. May 2008. P.3.

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need for the South African government to initiate water infrastructure projects that minimise the occurrence of water cuts.

Not only are water assessments required, but the development of water resources and appropriate management systems. The development and maintenance of quality water infrastructure is central to achieving economic growth.7

The project is aligned to the priorities set in the IDP (Annexure A) and the WSDP (Annexure C).

2.3.3 Address water scarcity and drought

The groundwater resource supplying water to Holpan is reported to be severely stressed. In the Reconciliation Study (2011) mention was made of a feasibility study for the upgrading of the bulk water supply to Holpan. Refer to Annexure D for the complete Reconciliation Strategy for the Windsorton cluster.

2.3.4 New infrastructure to improve water services quality

Dikgatlong scored 55.32% in the 2012 Blue Drop assessment (Annexure E) and the regulatory impression was that “The municipality must commence with a risk management approach as per water safety planning requirements and implement. This will guide towards the required excellence. Nevertheless, a very good performance and most encouraging to note improvement all round.” 8

7 Moyo, B. (2011) Do water cuts affect productivity? Case study of African manufacturing firms. Water SA, 37(3):349-356.[Online]. Available from:http://www.wrc.org.za/Knowledge%20Hub%20Documents/Water%20SA%20Journals/Manuscripts/2011/03 %20July%2020 11/2603.pdf (Accessed: 3 October 2011). 8 DWA (2012) Blue Drop Report. P325.

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of resources needed for health sector treatment. These benefits may appear as savings for households and for the public sector when health care is provided on a subsidized or free basis.9

Unsafe water supply causes childhood diarrheal diseases, which is a preventable cause of under-five mortality. According to the Blue Drop assessment report of 2012, Dikgatlong scored an overall of 55.32%, with Windsorton scoring 55.09%.

2.4 AGREEMENT OF PARTIES

2.4.1 Department of Water Affairs and Sanitation (DWS)

DWS made available funds for this project during the 2012/2013, 2013/2014 and 2014/2015 financial years which indicates that DWS agrees to the need and supports it. Together with this the project was tabled at several RBIG progress and Adjudication meetings.

2.4.2 Dikgatlong Municipality

The Dikgatlong Municipality supports the proposed project and has listed it in its 2012/13 IDP. The Municipality also appointed a professional service provider for the Implementation Readiness Study. The attached Council Resolution dated 28 March 2014, Resolution No. 2014/02/14 (Annexure H) the project was adopted by the Council of the Dikgatlong Municipality.

2.5 LEVEL OF SERVICE

According to the DWS’s Water and Sanitation Target Implementation Support Plan of August 2011, there are no basic water backlogs on informal or formal stands in Dikgatlong, while six sanitation backlogs were noted on formal stands and 205 that relate to informal stands.10

By end 2011, 692 households in living in Dikgatlong settlements did not have access to a water source that was equal or above RDP standards. Of those households that did not have access to a

9 World Health Organisation (2012) A manual for the economic assessment of small drinking water interventions. WHO/HSE/WSH/12.03. P 15. [Online.] Available from: http://apps.who.int/iris/bitstream/10665/75144/7/WHO_HSE_WSH_12.03_eng.pdf 10 DWA 2011. Water and Sanitation Target Implementation Support Plan of August 2011.

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clean water source in 2011, 211 households were living on formal stands and 481 were on informal sites.

However, Holpan did not record any households with a water supply that was below basic. Windsorton on the other hand had 483 households with a water supply below basic contributing to the majority of those without a basic supply in Dikgatlong Municipality.

In the Dikgatlong settlements, basic sanitation was unavailable to 2 200 households in 2011, of which 2 055 are living on informal stands. Of these, none occurred in Holpan, where all households had VIPs. Sanitation backlogs in Windsorton amount to 483 households, most of who lived on informal stands.

2.6 ECONOMIC GROWTH REQUIREMENTS

Please refer to Section 2.3.2 ‘Supporting economic growth and developments’ detailed above.

2.7 WATER SCARCITY

Windsorton is not facing a water resource deficit at present. The Vaal River has sufficient capacity to sustain the current and the projected future water requirements of the cluster and the water demand included in the Vaal System annual operating analysis for Windsorton is sufficient to meet the current and future projected water requirements of the cluster over the planning horizon (up to 2030).11

The groundwater resource supplying water to Holpan is reported to be severely stressed. An ongoing feasibility study is investigating the upgrading of the bulk water supply to Holpan.12

2.8 FUNCTIONAL CRITICALITY OF TOTAL SCHEME AND SPECIFIC COMPONENTS

The intentions of the project is twofold, namely (1) to constantly supply bulk potable water to Holpan, whilst phasing out their dependability on existing groundwater sources i.e. boreholes and (2) to

11 Reconciliation Strategy for the Windsorton Town in Dikgatlong Local Municipality in the Lower Vaal WMA (2010) 12 Reconciliation Strategy for the Windsorton Town in Dikgatlong Local Municipality in the Lower Vaal WMA (2010)

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upgrade the water treatment facility at Windsorton, ensuring sufficient potable water supply to all concerned. The key drivers of the project are:

 Provision of basic services to the community

 Supporting economic growth and development

 To address water scarcity and drought

 New infrastructure to improve water services quality

The population of Windsorton are projected to increase from 6 250 persons in 2011 to 7 255 persons in 2030, which brings about an increase in the Average Annual Daily Demand (AADD) from 761 m³/d to a total AADD in 2030 of 888 m³/d. The population of Holpan is projected to increase from 798 persons in 2011 to 1 246 persons in 2030. As a result hereof, the AADD is projected to stabilise at 117 m³/d.

The Vaal River has sufficient capacity to sustain the current and the projected future water requirements of the proposed upgrade and the water demand is included in the Vaal System annual operating analysis.

Several options were investigated during the feasibility phase of the project (refer to Section 5.2). The preferred and approved option was to abstract water from the Vaalharts KB canal, follow the proven purification process (Windsorton WTW) and distribute to end-users via the network. This implies that the following infrastructure and facilities be established and/or upgraded:

 Increase the existing capacity and upgrading of the WTW. This includes the following major components:

 Adding a third module at the existing Windsorton WTW and extending the treatment building including disinfection equipment.

 A backwash-water recovery system for the complete plant including the construction of new wash water recovery ponds

 The construction of sludge ponds for the storage and drying of water sludge wasted from the settling tanks.

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 Sedimentation tank with lamella plates to enable increasing the flow to the plant without upsetting the settling of the formed sludge and flocs.

 Larger diameter filters with anthracite and carbon with bower to air scour the filters.

 Construction of new water storage dam

 Construction of a bulk water rising main to Holpan including a pump station at the Windsorton WTW.

The WTW will ultimately have a peak supply capacity of some 85Kℓ/hour or 1.36Mℓ/day (16 hours). The two existing water purification modules at Windsorton are treating the water to an acceptable standard. The proposed third module will employ the same treatment technology as the first two modules.

The risks and consequences identified should the scheme not be implemented are summarized below:

 Health risk due to the poor quality water supply to the community. The Blue Drop 2012 report indicated this water quality risk with a score of 55.09% for Windsorton.

 Water supply risk to Holpan during drought periods. Should this not be done the community could encounter severe supply interruptions that could lead to health and social risks.

Several other minor risks are identified. From the above risks it is evident that should this infrastructure not be implemented it could lead to severe consequences to the community as well as to the Municipality.

2.9 EXTENT OF COST

2.9.1 Estimated Project Cost

Construction Cost

The estimated total cost of the project is R 43 850 618.38 (incl. contingencies, escalation & professional fees and VAT). The cost comprises of the following as illustrated in table below.

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Table 1. Estimated project Cost

AMOUNT AMOUNT AMOUNT IMPLEMENTATION COSTS WINDSORTON HOLPAN TOTAL

CONSTRUCTION COSTS TREATMENT Raw Water Dams R 2 199 175.00 R 825 825.00 R 3 025 000.00 Water treatment module @ 40K/hour R 2 239 160.00 R 840 840.00 R 3 080 000.00 Wash water recovery system R 1 239 535.00 R 465 465.00 R 1 705 000.00 Sludge storage ponds R 239 910.00 R 90 090.00 R 330 000.00 Refurbishment of Existing Plant R 719 730.00 R 270 270.00 R 990 000.00 Site works R 399 850.00 R 150 150.00 R 550 000.00 Mechanical / Electrical works R 1 679 370.00 R 630 630.00 R 2 310 000.00

DISTRIBUTION Pipe Line R 0.00 R 8 800 000.00 R 8 800 000.00 Reservoir R 1 639 385.00 R 615 615.00 R 2 255 000.00 Pump Station R 0.00 R 825 000.00 R 825 000.00

SUBTOTAL R 10 356 115.00 R 13 513 885.00 R 23 870 000.00 Preliminary and General 20% R 2 071 223.00 R 2 702 777.00 R 4 774 000.00

SUBTOTAL R 12 427 338.00 R 16 216 662.00 R 28 644 000.00 Contingencies 10% R 1 242 733.80 R 1 621 666.20 R 2 864 400.00

TOTAL CONSTRUCTION COSTS R 13 670 071.80 R 17 838 328.20 R 31 508 400.00 Professional Costs (Incl Disbursements and Supervision) R 2 050 510.77 R 2 675 749.23 R 3 781 008.00

Estimated escalation for 18 months (@ 0.5 % per month) R 1 414 852.43 R 1 846 266.97 R 3 176 046.72

SUB TOTAL R 17 135 435.00 R 22 360 344.40 R 38 465 454.72 VAT @ 14% R 2 398 960.90 R 3 130 448.22 R 5 385 163.66 TOTAL PROJECT IMPLEMENTATION COST R 19 534 395.90 R 25 490 792.61 R 43 850 618.38

Operation and Maintenance Cost

The estimated yearly operation and maintenance cost for the upgrade is indicated in table below. Note that the annual operational and maintenance cost was calculated according to the DWS Guidelines with the following assumptions:

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Operational Cost:

 Raw water purchase cost R 4.00 /kℓ

 Treatment cost of R 0.63 /kℓ (chemicals and electrical)

Maintenance Cost:

 Mechanical / Electrical Installations – 4 % of capital cost p.a.

 Civil / Building installations – 2 % of capital cost p.a.

 Pipelines – 0.5 % of capital cost p.a.

Table 2. Operational and Maintenance Cost

AMOUNT OPERATION & MAINTENANCE RELATED COSTS (Including VAT) RAW WATER per year (496 400Kℓ/annum)

Raw water costs (496 400 Kℓ/annum @ R4.00/Kℓ) R 1 985 600.00

SUBTOTAL R 1 985 600.00

TREATMENT COST per year (496 400Kℓ/annum)

Treatment cost R 366 168.00

Labour (use existing operators) R 401 280.00

SUBTOTAL R 767 448.00

MAINTENANCE COST per year (496 400Kℓ/annum)

Mechanical/Electrical (4% of Mechanical/electrical capital cost) R 105 336.00

Civil/Buildings/Pipelines (2.5% of Civil/Buildings/Pipelines capital cost) R 614 460.00

SUBTOTAL R 719 796.00

TOTAL O&M COST PER ANNUM R 3 472 844.00

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2.9.2 Estimated unit cost for the project

The number of households that can be served by the construction of the infrastructure is approximately 2 361 (based on 3.6 persons per household13) in year 2030. The unit cost is calculated for both towns and indicated in the table below.

Table 3. Unit cost per Kℓ (including VAT)

ITEM ANNUAL COST

Total O&M Cost per annum R 3 472 844.00

O&M Cost per Kℓ R 7.00

2.9.3 Comparison with Industry Guidelines

The proposed upgraded infrastructure will provide capacity to the entire population of Holpan and Windsorton. The number of combined population that can be served by the upgrade is approximately 7 048 (2011) to escalate to 7 331 by 2013 and by 2030 it is expected to be 8 501 residents.

The capital cost includes the upgrading of the Windsorton WTW and construction of a bulk water supply pipeline. The cost, allocated according to the Industry Guide to Infrastructure Service Delivery Levels and Unit Costs – 2010, is summarized in a table below. The construction cost and unit cost do not include the professional fees, environmental fees, supervision, P&G and VAT as these cost are also excluded from the industry guidelines when comparisons are made.

As indicated in the table below, the cost estimate is relatively comparable to the Industry Guide to Infrastructure with the exception of the WTW. The higher WTW cost can be the result of the additional wash water recovery system and the sludge storage ponds.

13 Dept. of Social Development (2012) Balelapa Household Profiling.

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Table 4. Cost estimate comparison to Industry Guide to Infrastructure

Actual Cost Estimate Industry Guide - escalated to 2014 (excluding VAT) @ 10% per annum Description Unit Cost -2013 Unit Cost -2013 Capital Cost Capital Cost (7 331 persons) (7 331 persons)

Pumps, pipework and Electrical works R 825 000.00 R 112.54 R 811 195.00 R 110.65

Pipeline R 8 800 000.00 R 1 200.38 R 11 365 856.70 R 1 550.38 Reservoir R 2 255 000.00 R 307.60 R 2 959 728.20 R 403.73 Water Treatment Works & Raw water R 11 990 000.00 R 1 635.52 R 8 006 395.10 R 1 092.13 dams TOTAL R 23 870 000.00 R 3 256.04 R 23 143 175.00 R 3 156.89

The capital costs of the above mentioned infrastructure are found to be acceptable as all costs comply with the recommended industry guidelines.

The Operational and Maintenance (O&M) cost was calculated at R 3 472 844.00 for the year 2014 (first year after construction). This amount is much higher than the Industry Guide to Infrastructure guidelines which amounts to R 186 077.30. The possible reason for this could be the cost to purchase raw water from the Vaalharts scheme.

2.10 AVAILABILITY OF CO-FUNDING

Based on the norms, number of indigents, associated users and enabling economic environment the social component of the project is calculated as 72.94%, thus the RBIG contribution is estimated at R 31 984 641.05 (incl. VAT).

The Municipality approved counter funding amounting to R 11 865 977.33 (incl. VAT) as per attached Council Resolution (Annexure H).

Funds of R 500 000.00 and R 300 000.00 (incl. VAT) were approved by DWS for the compilation of the Implementation Readiness Study in the 2012/2013 and 2013/2014 financial years. Another R 5 000 000.00 (incl. VAT) was made available in the 2014/2015 financial year to begin with the design and procurement documentation of the project.

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3 THE SOCIAL CRITERIA

The Windsorton/Holpan project requires an implementation ready study for the Regional Bulk Infrastructure Programme. This report addresses the social criteria, which according to the Terms of Reference (ToR) includes: 14

(a) Number of households to receive basic and higher levels of service

(b) Number of indigent households to be served and the social cost

(d) Number of jobs to be created per category i.e. temporary and permanent

(e) Affordability of proposed water tariffs

(f) Contribution toward poverty eradication, social upliftment and health improvement

(g) Socio-political support for the proposed development options

The study area concerns the town of Windsorton and the smaller settlement of Holpan, which are to benefit from the proposed water supply project. The project aims to improve and upgrade the bulk water supply to Holpan and Windsorton.

Holpan and Windsorton are situated within the Dikgatlong Municipality, which is in the Frances Baard District Municipality of the Northern Cape Province. Windsorton lies in Ward 4 and Holpan, Longlands, and part of Delportshoop are in Ward 5 of the Dikgatlong Municipality.

3.1 NUMBER OF HOUSEHOLDS AND PEOPLE TO BE UPLIFTED TO BASIC AND HIGHER SERVICE LEVELS

To determine the number of persons and households to be supplied with water in 2030, migration, household composition and historical growth trends are considered and discussed below.

14 Dept. of Water Affairs (2011) Water services regional bulk infrastructure programme – Framework for implementation. Version V10, January 2011.P.28.

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3.1.1 Factors affecting population and household size

Migration patterns

Migration, together with fertility and mortality, is a factor of population change. The people of the Northern Cape are relatively immobile and tend to stay in the same place for their lifetime. On average 86% of the Northern Cape population were living in the same place for the five years prior to the 2001 Census. However, the populations of Dikgatlong (90%) were less mobile than the Northern Cape average.15 By 2011, 93% of the Ward 4 and 5 Dikgatlong populations had been there at least since 2001 or born thereafter and not moved, which is higher than the Dikgatlong average of 91%.16

However, a rapid decline of migration into the province is predicted, which is a Northern Cape trend. The 2011 Census indicates a net out-migration of 6,735 persons from the Northern Cape.17 With declining economies, Dikgatlong and especially Holpan are unlikely to attract immigrants. Although the local population may appear to be stagnant, towns are growing physically as new households are formed and rural households move to towns to access better facilities and services. This constant increase of in-migration of people from the rural areas to the towns creates pressure on urban infrastructure and services. This rural-urban migration trend was led by pull-factors with the access to health and education facilities as major attractions. However, it is probable that the out-migration from farms to settlements has ended, with the main out-migration having taken place during the 1990s and early 2000s.

Household composition

The average household size in the Northern Cape was four persons per household in 2007. The household size was slightly higher in Dikgatlong at 4.07, having increased from 3.79 in 2001. 18 The

15 Squires, A. and Wellmann, G. Human development report Northern Cape, 2010. Department of Social Development. P.24-25. 16 StatsSA, Census 2011. 17 StatsSA. Census 2011, Statistical Release P0301.4. 18 Squires, A. and Wellmann, G. Human development report Northern Cape, 2010. Department of Social Development. P.33.

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Balelapa Household Profiling report of the Dept. of Social Development states that the average household size in 2011 in Dikgatlong was 3.60,19 a decline from 2001.

By comparison, in 2001 the average household size was already 3.5 in Holpan and 3.51 in Windsorton.20 The average household size in Ward 4 and 5, excluding farm households, was 3.94 and 3.87 respectively in 2011.21

The average household size can be applied to dwelling counts to estimate population size. However, this should be done with caution to prevent an overestimation of population. The average household size applied should be based on researched evidence and the date of the research should be comparable to the dwelling count date i.e. 2011 average households size applied to a 2010 dwelling count.

Housing developments

Housing developments are a major contributor to increasing numbers of households. Almost 4,000 houses are planned for the period 2010/11 to 2014, although only 390 of these were planned in Dikgatlong.

To determine the water needs on informal stands and on formal stands, the Department of Cooperative Government, Human Settlement and Traditional Affairs provided information on the number of houses that would be constructed from 2009 until 2014.22 The water needs on informal stands is eradicated though the housing programme. However, there are no water needs on informal stands in Dikgatlong.

19 Dept. of Social Development (2012) Balelapa Household Profiling. 20 Derived from Census 2001 (StatsSA) 21 StatsSA, Census 2011. 22 Department of Water Affairs. Water and sanitation target implementation support plan, Northern Cape. August 2011.

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Table 5. Housing needs in the Dikgatlong Municipality 23

Total Houses Water Needs on Houses to be Houses to be Houses to be Municipality planned for informal Stands built in 2009/10 built in 2010/11 built in 2011/12 2014 Dikgatlong 480 300 272 200 772

3.1.2 Population size and growth trends

Historic population

Historical records and growth trends of the population and households resident in Windsorton, Holpan and the Dikgatlong Municipality are detailed in the table below. Between the Census years of 1996 and 2001, Holpan experienced a negative population growth of -2.6% per annum, while Windsorton’s population growth was negative too (-1.45%). The population of the municipality declined by an average of -0.63% per annum during this period too. By contrast between 2001 and 2007 the Dikgatlong population experienced a positive growth of 2.19% per annum, while the households increased by a lesser proportion of 0.47%. the 2001 and 2011 Censuses the municipality’s population increased by 2.73% p.a.

To determine the 2010 population size of Holpan dwelling counts and average household size is used. Although ward data of the Census 2011 has been released, portions of Delportshoop and the whole of Holpan and Longlands are in Ward 5 and thus data cannot be segregated for Holpan. Please refer to figure overleaf.

The Eskom Spot Data shows that there were 206 dwellings in Holpan in 2010. Please refer to the map below. By applying an average household size of 3.87, which was recorded in Ward 5 by the Census 2011; the 2010 population of Holpan is estimated at 798 in 2010.

Overall, the population trend in Holpan was negative (-2.60% p.a.) from 1996 to 2001, which becomes strongly positive (4.76% p.a.) between 2001 and 2010. The Windsorton population shows a similar trend, being negative at -1.45% between 1996 and 2001, and then positive between 2001 and 2011

23 Department of Water Affairs. Water and sanitation target implementation support plan, Northern Cape. August 2011. P.3.

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by 2.12% p.a. Both settlements show an increase in households from 1996 onwards. This pattern of increasing households is typical of small communities in the Northern Cape where the population may be in decline although households keep increasing often due to the splitting of intergenerational households and driven by the RDP housing programme.

Table 6. Historical population and household growth24

Number Growth rate p.a. 1996- 2001- 2001- 2001- 1996 2001 2006 2007 2008 2010 2011 2001 2007 2010 2011 POPULATION Holpan 599 525 798 -2.60% 4.76% Windsorton 5,452 5,067 6,065 6,250 -1.45% 2.12% DIKGATLONG 36,942 35,792 40,752 46,841 -0.63% 2.19% 2.73% HOUSEHOLDS Holpan 102 150 435 206 8.02% 3.59% Windsorton 1,237 1,444 1,587 3.14% 0.95% DIKGATLONG 7,678 9,737 10,015 11,967 4.87% 0.47% 2.08%

24 StatsSA, Census 2011.The farms data has been excluded from Ward 4 of Dikgatlong to extract population and household data for Windsorton.

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Figure 2. Dwelling counts 2010

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Ward 5 – shared with Holpan Ward 6

Figure 3. Map illustrates north-eastern wards of Delportshoop that lies in ward 5 with Holpan

Figure 4. Google Earth image of Holpan, January 2008

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The Google Earth image shows the dwellings located in Holpan in January 2008, while the map overleaf is of the Eskom 2010 dwelling count.

Figure 5. Dikgatlong ward boundaries and location of settlements

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Population growth expectations

The 2030 population of Holpan and Windsorton needs to be based on historic data discussed above and on anticipated growth resulting from future initiatives and push-factors, detailed in the section above on ‘Migration’. Although historically negative growth rates are recorded for Holpan and Windsorton between 1996 and 2001, both settlements experienced strong positive growth after 2001. For the purposes of water services planning to 2030, the growth rate of Holpan has been set between 2.50% and 1.50% per annum. Thus, the population is estimated to reach 1,246 in 2030 as presented in the figure below.

Figure 6. Holpan population estimates to 2030

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Figure 7. Windsorton population estimates to 2030

The Windsorton population is estimated to reach 7 255 by 2030 with growth rates declining from 2.12% p.a. in 2011 to 0.60% by the end of the period. The reconciliation strategy report anticipated negative growth rates from 2008 through to 2030 when the population would decline to 4 831.25 However, given the strong positive growth recorded between 2001 and 2011, an increased population is expected.

25 Data source: DWA (2009) Reconciliation Strategy for Windsorton. P9.

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3.1.3 Basic and higher service levels

Water supply

By end 2011, 692 households in living in Dikgatlong settlements did not have access to a water source that was equal or above RDP standards. Of those households that did not have access to a clean water source in 2011, 211 households were living on formal stands and 481 were on informal sites. However, Holpan did not record any households with a water supply that was below basic. Windsorton on the other hand had 483 households with a water supply below basic contributing to the majority of those without a basic supply in Dikgatlong Municipality.

Table 7. Status of water supply27

Formal Informal

am/dam)

Settlement House connection Erf Connectio Standpipe Communal Communal Standpipe>200m at None collected (Self river/stream/dam) Unknown TOTALFORMAL WATER STANDS BelowFormal Total Basic House connection Erf Connection Standpipe Communal Communal Standpipe>200m at None collected (Self river/stre Unknown TOTAL WATER INFORMAL HH Water informal Total below basic RDPWATER BELOW Barkly West 2,308 696 107 0 58 0 3,111 58 0 0 2,500 0 0 0 2,500 0 58 Delportshoop 2,485 0 0 0 1 0 2,485 1 0 0 150 0 100 0 150 100 101 Gong Gong 0 0 0 0 0 0 0 0 0 0 800 0 0 0 800 0 0 Holpan 0 0 0 0 0 0 0 0 0 337 0 0 0 0 337 0 0 Koopmansfontein 0 0 0 0 0 0 0 0 37 0 0 0 0 0 37 0 0 Longlands 0 101 0 0 0 0 101 0 0 0 358 0 0 0 358 0 0 Morrisdraai 0 0 0 0 0 0 0 0 0 0 100 0 0 0 100 0 0 Pniel 0 0 0 0 0 0 0 0 0 0 300 0 0 0 300 0 0 Pniel Estates 0 0 0 0 0 0 0 0 0 0 30 0 0 0 30 0 0 Smithsmine 0 0 0 0 50 0 0 50 0 0 0 0 0 0 0 0 50 Stilwater 0 0 0 0 0 0 0 0 0 300 0 0 0 0 300 0 0

26 DWA 2011. Water and Sanitation Target Implementation Support Plan of August 2011. 27 Aurecon (2011) Backlog model for DWA.

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Formal Informal

am/dam)

Basic sanitation

In the Dikgatlong settlements, basic sanitation was unavailable to 2 200 households in 2011, of which 2 055 are living on informal stands.

Of these, none occurred in Holpan, where all households had VIPs. Sanitation backlogs in Windsorton amount to 483 households, most of who lived on informal stands.

Table 8. Status of sanitation supply28

FORMAL INFORMAL

tal sanitation below sanitation tal

28 Aurecon (2011) Backlog model for DWA.

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FORMAL INFORMAL

tal sanitation below sanitation tal

Settlement Flush to network Conservancy tank Septic tank UDS VIP Pit Bucket None Unknown below sanitation Total on basic formal Flush to network Conservancy tank Septic tank UDS VIP Pit Bucket None Unknown To informal basic NOT SANITATION SERVED Longlands 101 0 0 0 0 0 0 0 0 0 0 0 0 0 0 358 0 0 0 358 358 Morrisdraai 0 0 0 0 0 0 0 0 0 0 0 0 0 0 100 0 0 0 0 0 0 Pniel 0 0 0 0 0 0 0 0 0 0 0 0 0 0 300 0 0 0 0 0 0 Pniel Estates 0 0 0 0 0 0 0 0 0 0 0 0 0 0 30 0 0 0 0 0 0 Smithsmine 0 0 0 0 0 0 0 0 0 0 0 0 0 0 50 0 0 0 0 0 0 Stilwater 0 0 0 0 0 0 0 0 0 0 0 0 0 0 300 0 0 0 0 0 0 Ulco 0 0 0 0 0 0 0 0 0 0 0 0 403 0 0 0 0 0 0 0 0 Vaal Gamagara 0 0 0 0 0 0 0 0 0 0 42 0 0 0 0 0 0 0 0 0 0 Waldecks plant 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 16 0 0 0 16 16 Windsorton 1,196 0 92 0 0 0 33 69 0 102 0 0 0 0 0 381 0 0 0 381 483 Total 2,030 1,776 3,088 0 107 0 33 112 0 145 42 0 403 37 3,367 755 0 1,300 0 2,055 2,200

3.1.4 Meeting MDG target 7.c

The MDG Target 7.C is to halve, by 2015, the proportion of the population without sustainable access to safe drinking water and basic sanitation.29 The gap between the 2001 and 2011 status has been halved in Dikgatlong, although remaining backlogs need to be further eradicated. However, none of these are in Holpan, while a majority are in Windsorton.

29 United Nations (n.d.) Goal 7: Ensure Environmental Sustainability. [Online]. Available from: http://www.un.org/millenniumgoals/environ.shtml (Accessed: 6 June 2011).

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Figure 8. Meeting MDGs at Dikgatlong30

3.2 NUMBER OF POOR HOUSEHOLDS TO BE SERVED

3.2.1 Poverty and household income

Household income

The proportion of Northern Cape people living below the poverty line (R283) has declined from 40% in 1995 to 27% in 2008, while the depth of poverty was 11% in 1995, compared to 8% in 2008.31 The district with the greatest proportion of people living in poverty is John Taolo Gaetsewe and with the lowest proportion is Namakwa. 32

According to StatsSA’s Community Survey of 2007, the percentage Northern Cape households living in income poverty is 21% i.e. income less than R9 600 p.a. Of this, 8% reported having no income at

30 Source: StatsSA Census 2001, DWA 2011. 31 The Presidency, RSA. Development Indicators, 2009. P26-27. 32 Northern Cape Provincial Treasury. District Socio Economic Review 2009. P35.

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all. In Dikgatlong, 9% of households reported receiving no income, higher than the Northern Cape average of 8%.

Table 9. Household income per annum 2007 33

Municipality None R1- R9,601 R9,601-R76,800 More than R76,800 Dikgatlong 9% 12% 74% 11% Northern Cape 8% 13% 70% 18%

According to the latest Census 2011 data, the percentage of Dikgatlong households with no income has decreased from 27% in 2001 to 15.2% in 2011. In 2011, 15.1% of Windsorton (Ward 4) and 15.6% of Holpan (Ward 5 with Longlands and part of Delportshoop) households had no income, which is similar to the municipal average of 15.2%.

Figure 9. Household income distribution34

33 Squires, A. and Wellmann, G. Human development report Northern Cape, 2010. Department of Social Development. P 138.

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Social grants

Social grants are a successful instrument to reduce poverty in South Africa. It is estimated that social grants reduce poverty by 67% when the destitution line is used as the benchmark.35 South Africa's social security system, a major monthly income source for over 12 million people, has played an increasingly important role in reducing poverty and inequality in the country since 2000.

According to the Community Survey 2007, the number of persons receiving grants in Dikgatlong is 11 114; thus, the proportion of people receiving grants is 27.3%. This is similar to the Northern Cape average where one in three persons receives a grant. By contrast, for example, in Gamagara 16.3% of persons receive grants and in Kareeberg 75%. In Dikgatlong, child support grants account for the highest number followed by old age, and disability grants.

Table 10. Number of persons receiving grants36

Dikgatlong % Old age pension 2,055 18.5% Disability grant 2,872 25.8% Child support grant 5,656 50.9% Care dependency grant 68 0.6% Foster care grant 0.0% Grant in aid 88 0.8% Social relief 52 0.5% Multiple social grants 0.0% Institutions 323 2.9% TOTAL GRANTS 11,114 100.0% Not Applicable 29,635 72.7% TOTAL 40,748 100.0%

34 Data source:StatsSA. Census 2011. 35 Samson, M. (2006) Tackling poverty with social transfers to vulnerable groups: evidence from Africa. International forum on the eradication of poverty. New York City 15-16 November 2006. UNICEF session on “children in poverty”. Economic policy research institute. 36 StatsSA, Community survey 2007.

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3.2.2 Housing types and ownership

Access to housing, and the condition of housing, is a good indicator of the level of socio-economic development of an area. In addition, new housing creates a demand for water services and it is thus relevant to forecast the new number of housing units to be constructed and make an estimate of the backlog.

The number of informal dwellings in Ward 5 is 120 and in Ward 4 it is 54, lower proportions than the 17% in the municipality overall.

Table 11. Type of dwelling in 201137

Ward 5 ex-farms Ward 4 (Windsorton) (Holpan, Longlands and part Delportshoop) Type of dwelling HH % HH % House or brick/concrete block structure on a separate 1 440 90.7% 1 197 74.0% stand or yard or on a farm Traditional dwelling/hut/structure made of traditional 3 0.2% 52 3.2% materials Flat or apartment in a block of flats 2 0.1% 12 0.7% Cluster house in complex 1 0.1% 0 0.0% Townhouse (semi-detached house in a complex) 0 0.0% 1 0.1% Semi-detached house 5 0.3% 15 0.9% House/flat/room in backyard 4 0.3% 1 0.1% Informal dwelling (shack; in backyard) 15 0.9% 29 1.8% Informal dwelling (shack; not in backyard; e.g. in an 39 2.5% 91 5.6% informal/squatter settlement or on a farm) Room/flatlet on a property or larger dwelling/servants 0 0.0% 0 0.0% quarters/granny flat Caravan/tent 5 0.3% 4 0.2% Other 72 4.5% 216 13.3% Unspecified 0 0.0% 0 0.0% Not applicable 0 0.0% 0 0.0% Total 1 587 100.0% 1 618 100.0%

37 Data source: StatsSA Census 2011.

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In 2011, the percentage homes owned and fully paid off was at 35% in Windsorton and 54% in Ward 5, while another 1% was still paying off in both areas. Ownership levels in Ward 4 are lower than in Ward 5. Rented accommodation was occupied by 6% and 4% in Ward 4 and 5 respectively. A large percentage of homes were occupied rent-free, 48% in Ward 4 and 39% in Ward 5.

Table 12. Dwelling ownership38

Ward 5 ex-farms (Holpan, Ward 4 (Windsorton) Longlands and part Delportshoop) Tenure status HH % HH % Rented 102 6% 64 4% Owned but not yet paid off 19 1% 10 1% Occupied rent-free 768 48% 631 39% Owned and fully paid off 550 35% 869 54% Other 147 9% 44 3% Total 1 587 100% 1 618 100%

3.2.3 Indigent policy

In the Dikgatlong Municipality, an indigent household is defined as a household with a monthly income equivalent or less than two state old age pensions.39

A social package assists households that are poor or face circumstances that limit their ability to pay for services. To receive free services households are required to register in terms of the Municipality’s Indigent Policy.40

In terms of the Municipality’s indigent policy registered households are entitled to 6 kℓ fee water, 50 kwh of electricity, 6 kℓ sanitation and free waste removal equivalent to 85 ℓ once a week, as well as a discount on their property rates. 41

38 StatsSA. Census 2011. 39 As per Municipal Indigent Policies. 40 Dikgatlong 2012/13 Adopted budget. P 15. 41 Dikgatlong 2012/13 Adopted budget. P 41.

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3.2.4 Number and proportion of indigent households

There are several sources from which to measure the proportion of indigent households including the Municipality’s indigent household register and data from Statistics South Africa. Because data needs to be credible and verifiable, data from StatsSA is used. The latest 2011 Census data by municipality and by ward has been published. The Census 2011 data source is consulted because it is a source used by National Treasury and because it is widely recognised that there is a severe under registration of indigent households by municipalities. The main reason for this is that there is no incentive to be registered as an indigent household, since households often receive free basic services regardless of their status at the municipality.

In October 2011, the value of two old age pensions was R27,360 per annum, compared to R13,680 p.a. in 2001. Assuming an even distribution in the R19 201 - R 38 400 income category, then 42.5% of households in that category had an income of R27,360 p.a. Thus, it can be estimated that 67.6% of the Ward 4 (Windsorton) households and 63.6% of Ward 5 ex-farms (Holpan, Longlands and part of Delportshoop) had incomes of ≤R27,360 p.a. and could therefore be regarded as indigent households. By comparison the municipality had a lower percentage of indigent households (61.8%).

Compared to 2001 household income levels, the 2011 levels in Windsorton are higher after taking inflation into account i.e. 80.0% and 67.6% indigent households in 2001 and 2011 respectively. By contrast, indigent levels in Holpan have increased from 53.3% to approximately 63.6% from 2001 to 2011.

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Figure 10. Indigent households 2001 and 2011 Table 13. Household income distribution per annum 2001 and 2011 (Cumulative percentage is the percentage of households that had incomes of less than 2 state old age grants)

Annual household 2001 2011 income 2011 Ward 5 (Holpan and Windsorton Holpan Windsorton Dikgatlong Dikgatlong portion of (Ward 4) Delportshoo p) Cum HH Cum% HH Cum% HH Cum% HH Cum% HH Cum% HH % 21 14.0% 581 40.3% 2634 27.1% 252 15.6% 240 15.1% 1,814 15.2 No income % 3 16.00 149 50.6% 897 36.3% 81 20.6% 95 21.1% 618 20.3 R1 - R4 800 % % 42 44.0% 314 72.3% 2203 58.9% 137 27.4% 157 31.0% 866 27.6 R4 801 - R 9 600 % 33 53.3% 259 80.0% 1820 66.8% 398 52.0% 416 57.3% 2,905 51.8 R9 601 - R 19 200 % 30 84 1109 440 63.6% 386 67.6% 2,800 61.8 R19 201 - R 38 400 % R38 401 - R 76 800 15 36 576 190 199 1,514 R76 801 - R153 600 6 8 346 79 56 794

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Annual household 2001 2011 income 2011 Ward 5 (Holpan and Windsorton Holpan Windsorton Dikgatlong Dikgatlong portion of (Ward 4) Delportshoo p) Cum HH Cum% HH Cum% HH Cum% HH Cum% HH Cum% HH % R153 601 - R307 200 0 6 108 29 26 412 R307 201 - R614 400 0 3 15 8 7 184 R614 401 - R1 228 800 0 3 24 2 1 33 R1 228 801 - R2 457 0 0 3 1 2 15 600 R2 457 601 and more 0 0 0 0 1 11 TOTAL 150 1443 9735 1617 1586 11,966

In 2008/2009, the number of indigent households registered at Dikgatlong Municipality was 6 484 households or an estimated 37% of total households.42 The target of the Dikgatlong Municipality is to register 5 000 or more indigent households during the 2012/13 financial year, a process reviewed annually. In the 2012/13 financial year 5 000 registered indigents have been provided for in the budget which increases to 6 000 by 2013/14. 43

However, the proportion of indigent households is expected to be higher at Holpan than the municipal average. Holpan is a small rural settlement with an undiversified economic base. It is located near the Holpan mine, on the outskirts of Windsorton.

The Balelapa household profiling data for Holpan suggests that households are far worse off than that reported for Ward 5 of Dikgatlong. Using the same approach of the value of two old age pensions was R27 360 per annum or R2 280 p.m. and assuming an even distribution in the R2001-2500 income category, then 87.6% of households in that category had an income of R2 280 p.m. and could therefore be regarded as indigent households. However, the Balelapa survey only recorded

42 Department of cooperative governance, human settlements and traditional affairs, Northern Cape. Consolidated report on the performance of Northern Cape municipalities 2008/2009 in terms of section 47 of the local government municipal systems act, 2000.P. 43 Dikgatlong 2012/13 Adopted budget. P 15.

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household incomes for 123 households surveyed, which represents approximately 60% of the universe of 206 households counted by Eskom.

Table 14. Household income in Holpan from Balelapa household profiling 201144

Holpan

Nevertheless, the proportion of indigent households that are assigned in the social component calculation is based on the Balelapa data i.e. 87.6% indigent households in Holpan and 67.6% for Windsorton.

3.3 ESTIMATED NUMBER OF JOBS TO BE CREATED

3.3.1 Construction jobs

Number of jobs to be created during the construction phase of the project is contingent to having an Extended Public Works Programme assigned to the project. Temporary job creation opportunities are created on most construction projects.

44 Data source: Balelapa household profiling, 2010-2011.

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To estimate the number of construction opportunities for local unskilled labour, data was extracted from 109 projects with person day data and 49 with number employed data from the Northern Cape MIG project list. Person days per Rand and persons employed per Rand was calculated at 0.000173 and 0.0000023 respectively. Based on this average the Holpan project of R43.85 million can create an estimated 100 jobs with 7 585 person days.

Table 15. Construction employment on Holpan/Windsorton project based on MIG data45

PERSON DAYS Person days on MIG project 131 042 MIG Projects value (109 projects) R 759 062 608 Person days per R 0.000173 Holpan/Windsorton project R 43 850 618.38 Person days on Holpan/Windsorton 7 585 NUMBER OF PERSONS Number of people on MIG projects 964 MIG Projects value (49 projects) R 424 446 000 People per R 0.0000023 Holpan/Windsorton project R 43 850 618.38 Persons on the Holpan/Windsorton project 100

3.3.2 Direct employment during O&M phase

The minimum number of persons to be employed is related to the type of works to be operated. In terms of the classification system for Water Care Works detailed in the Government Gazette No. 2834 of 27 December 1985, the plant is currently classified as a Class D Works. After the newly constructed infrastructure is handed over to the Municipality, it will most probably be classified as a Class C Works.

The staff required in terms of the registration of the plant is detailed below. At least 3 full-time operators are required for the WTW at Windsorton, with a Class III supervisor and a weekly inspection by a Class IV supervisor. Maintenance team and laboratory staff is excluded.

One employee will be required to operate the pipeline and the water distribution at Holpan.

45 Data source: COGHTA. Northern Cape MIG projects from 30 September 2003 onwards.

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Table 16. Minimum number of person to be employed for the operation of a water care work46 Class and number of Class of weekly Work class Class of supervisor person as operators inspection E 1 x trainee I II 1 x trainee D II III 1 x I 1 x trainee C 2 x I III IV 1 x II 1 x trainee 2 x I B IV V 1 x II 1 x III 1 x trainee 2 x I A 1 x II V - 1 x III 1 x IV

3.4 AFFORDABILITY OF THE PROPOSED WATER TARIFFS

3.4.1 Water and sanitation tariffs

Block/step tariffs are in place for water in Dikgatlong. Block tariffs are an effective mechanism to manage water demand, which should be implemented especially in WSAs where water is scarce. In determining the revenue requirements and tariffs for water services, WSAs must at least:

 recover the cost of water purchased

 recover overhead, operational and maintenance costs

 recover the cost of capital not financed through any grant, subsidy or donation

 provide for the replacement, refurbishment and extension of water services works

According to the Dikgatlong 2012/13 budget, tariff and property rate increases should be affordable, except where there are price increases in the inputs of services that are beyond the control of the

46 Republic of South Africa. Government Gazette No. 2834 of 27 December 1985, Schedule IV.

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municipality, for instance the cost of bulk water and electricity. In addition, tariffs need to remain or move towards being cost reflective, and should take into account the need to address infrastructure backlogs. 47

The main challenges experienced during the compilation of the 2012/13 MTEF related to water are as follows: 48

 Aging and poorly maintained water, roads and electricity infrastructure;

 The increased cost of bulk water and electricity (due to tariff increases from Sedibeng Water and Eskom), which is placing upward pressure on service tariffs to residents.

 Continuous high tariff increases are not sustainable - as there will be point where services will no-longer be affordable;

 Wage increases for municipal staff that continue to exceed consumer inflation, as well as the need to fill critical vacancies;

 Affordability of capital projects – original allocations had to be increased and the operational expenditure associated with prior year’s capital investments needed to be factored into the budget as part of the 2012/13 MTEF process; and

 Unemployment and poverty within the municipal areas.

In 2012/13, 0-6 Kℓ of water costs R5.93. The highest block charge is R7.79 per Kℓ initiated at 21 Kℓ. Indigent households in Dikgatlong receive 6 Kℓ free per month.

47 Dikgatlong 2012/13 Adopted budget. P 5. 48 Dikgatlong 2012/13 Adopted budget. P 4.

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Figure 11. Domestic water tariffs49

The sanitation tariffs for households amounts to R 86.00 for a small vacuum tank, R 161.00 for a large vacuum tank.50

3.4.2 Affordability

Typically, a household can afford to pay up to 5% of household budget on water services according to international standards. A number of developing countries have adopted polices to promote an affordability index for poor households of 3-5% and implement measures to reduce the burden of expenses.51 Therefore, affordability calculations are made for Ward 4 and 5 of Dikgatlong Municipality based on water and sanitation services comprising 5% of household income.

If a typical household uses 700 litres per day, the monthly consumption is 21 Kℓ.

49 Dikgatlong Municipality 2012/13 Adopted budget. P 9. 50 Dikgatlong adopted budget 2012/13. P 11. 51 Smets, H. (2009) Access to drinking water at an affordable price in developing countries. Water Academy, France. P58.

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After the subsidisation of the free basic water amount of 6 Kℓ in Dikgatlong to indigent households, 21 Kℓ of water would cost R 99.90 in 2012/2013 and R 187.07 for non-indigent households. Sanitation would cost another R 86.00 per small vacuum tank, which together with water totals R370.11 for non-indigent households and R113.89 (including VAT) p.m. Thus, for a household to be able to afford 5% of household income on water services, non-indigent households would need to have an annual income of at least R 88 827.00 and indigent households at least R 24 326.00.

By discounting 2012/13 income to 2011 using the CPI index of Statistics South Africa, approximately 63.7% and 60.9% of indigent registered households in Ward 4 and 5 respectively, would not be able to allocate 5% of household income to buy water services. Even less non-indigent households can afford 5% of household income on water services i.e. 94.2% and 92.8% in Ward 4 and 5 respectively.

Table 17. Assumptions and calculations of water affordability 2012/1352

Registered Not Dikgatlong (Ward 4 and 5) indigent registered household Kl free 0 6 Typical household consumption in kl (based on 700l/d) 21.0 21.0 Basic charge water (ex-VAT) R51.59 R0.00 Water amount payable (ex-VAT R187.07 R99.90 Sanitation amount (ex-VAT) R86.00 R0.00 Total water and sanitation Including VAT R370.11 R113.89 At 5% of income then monthly household income is at least in 2012/13 R 7,402 R 2,278 At 5% of income then annual household income is at least in 2012/13 R 88,827 R 27,333 HH income p.a. 2011 R 79,056 R 24,326 % HH with income less than R# pm Ward 4 94.2% 63.7% Ward 5 92.8% 60.9%

A proposal for a new structure for the local government equitable share formula has been presented by National Treasury in partnership with other stakeholders.

Cost estimates for basic services component in the proposed formula provides R 277.78 per poor household per month, which is comprised of the following amounts for each service in 2013/14: 53

52 Derived from StatsSA CPI index, Census 2011, 2012/13 municipal tariffs

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 R56.24 for energy

 R87.90 for 6 Kℓ water

 R73.25 for sanitation

 R60.39 for refuse removal

These amounts are assumed to provide sufficient funds for a municipality to be able to provide and maintain a package of free basic services to poor households which are based on estimates of the cost of municipal services. 54 Dikgatlong’s 2012/13 cost of water and sanitation at R370.11 per month is greater than the R161.15 set aside for water and sanitation by the Treasury proposal.

3.5 CONTRIBUTION TOWARDS POVERTY ERADICATION, SOCIAL UPLIFTMENT AND HEALTH

The Framework for Implementation of bulk regional projects sets out drivers of regional bulk infrastructure.55 Three of these drivers, which contribute directly towards poverty reduction, social upliftment and health, relate to the Dikgatlong project as follows:

 Need to address access to basic services: No water backlogs exist in Holpan, while a majority of the Municipality’s backlogs are in Windsorton. In additions, the desire for higher level of services is noted.

Although the impact of climate change is debatable, it appears that global warming will have some measurable impact on future water supplies. Many water resource planners acknowledge this risk but do not yet explicitly incorporate it into plans.

53 LGES formula review technical working group (2012) Towards a new equitable share formula for local government: proposal for a new structure for the local government equitable share, discussion document, September 2012. P 24. 54 LGES formula review technical working group (2012) Towards a new equitable share formula for local government: proposal for a new structure for the local government equitable share, discussion document, September 2012. P 24. 55 Dept. of Water Affairs (2011) Water services regional bulk infrastructure programme – Framework for implementation. Version V10, January 2011.P. 11.

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This may be due to a number of factors, including relatively short planning horizons and wide variability, and perceived low reliability of estimates of potential impacts.

 Need to support economic growth and development: Bulk infrastructure must serve both economic and social needs. The expansion of mining activities needs to be supported and municipal services need to be provided to employees.

This project will contribute to poverty reduction, increase levels of service, uplift and stimulate economic growth because it will have a major stimulus on:

 the water service provider’s business

 socio-economic benefits resulting from a quality water services and waste water quality that is compliant to standards

 construction with impacts on spending, employment, and taxes and in its operational phase there are multiplier effects

 supporting the expansion of the mining industry by providing needed municipal services

56 Department of Water Affairs and Forestry (2008) Strategic framework for sustainable growth and development – A discussion document. May 2008. P.3.

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construction. After the completion of construction, at least one person will be required to operate the pipeline and the distribution of water at Holpan.

Such increased employment, combined with increased income, will positively affect the local economy and have an effect on reducing poverty. Buying power in the area will be increased and thus there will be the opportunity for new business establishments, which in turn will create more jobs.

While providing water does not necessarily result in economic growth, a lack of water or poor water quality can and does inhibit growth. The challenge of the water sector is to align the provision of water with the spatial and sectorial growth of the economy. 58 Water infrastructure is an intermediate input and its efficient reliable supply raises the profitability of production and thus enhances the marginal productivity of labour and capital. Substantial number of hours without water has a negative effect on productivity.

It is anticipated that the project will result in a decrease in water shortages, which in turn should decrease the risk to entrepreneurs and improve healthy living conditions.

57 Juana, J.S. 2008. Efficiency and equity considerations in modelling inter-sectoral water demand in South Africa. Thesis. University of Pretoria. February 2008. 58 Department of Water Affairs and Forestry (2008) Strategic framework for sustainable growth and development – A discussion document. May 2008. P.3.

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development of water resources and appropriate management systems. The development and maintenance of quality water infrastructure is central to achieving economic growth.59

The project is aligned to the priorities set in the IDP and the WSDP.

 Need of new infrastructure to improve water services quality: Dikgatlong scored 55.32% in the 2012 Blue Drop assessment and the regulatory impression was that “The municipality must commence with a risk management approach as per water safety planning requirements and implement. This will guide towards the required excellence. Nevertheless, a very good performance and most encouraging to note improvement all round.” 60

The quality of water has a direct impact on the health of a population. Improved access to safe drinking-water can produce benefits in addition to saving direct costs of diagnosis and treatment. In addition to time savings for periods of ill-health avoided, fewer episodes of illness reduce the amount of resources needed for health sector treatment. These benefits may appear as savings for households and for the public sector when health care is provided on a subsidized or free basis.61

Unsafe water supply causes childhood diarrheal diseases, which is a preventable cause of under- five mortality. According to the Blue Drop assessment report of 2012, Dikgatlong scored an overall of 55.32%, with Windsorton scoring 55.09%.

3.6 NUMBER OF ASSOCIATED SERVICES BENEFITING

Associated services such as schools, clinics and hospitals will be provided with water and sewerage by the Municipality.

59 Moyo, B. (2011) Do water cuts affect productivity? Case study of African manufacturing firms. Water SA, 37(3):349-356. [Online]. Available from: http://www.wrc.org.za/Knowledge%20Hub%20Documents/Water%20SA%20Journals/Manuscripts/2011/03%20J uly%202011/2603.pdf (Accessed: 3 October 2011). 60 DWA (2012) Blue Drop Report. P325. 61 World Health Organisation (2012) A manual for the economic assessment of small drinking water interventions. WHO/HSE/WSH/12.03. P 15. [Online.] Available from: http://apps.who.int/iris/bitstream/10665/75144/7/WHO_HSE_WSH_12.03_eng.pdf

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3.6.1 Health facilities

A clinic is located at Windsorton,62 while a mobile service visits Holpan.63

The target number of visits to a primary health care facility i.e. a clinic or community health centre is 3.5 visits per person per annum. On average, the population of Dikgatlong visit clinics 2.45 times per annum, which is at a lower rate than the average targeted. 64

3.6.2 Schools

There are two schools in Windsorton with 1,392 learners enrolled in the first quarter of 2012.65

Table 18. Schools in the study area66

Institution Town Learners Educators Dl Jansen Primêre Skool Windsorton 1,071 33 Reakantswe Intermediate School Windsorton 321 12 TOTAL 1,392 45 3.6.3 Community halls and facilities

There are no community facilities in Holpan. The IDP makes provision for the development of a community hall, cemetery and a sports field.67

Windsorton has a better complement of community facilities than Holpan. According to the IDP, Windsorton has a library that was damaged during community protest action.

62 Northern Cape Department of Health. Service transformation plan, December 2010. P64. 63 Dikgatlong IDP 2012/13.P 13. 64 Northern Cape Department of Health. Service transformation plan, December 2010. P51; Northern Cape Human Development report 2010. P 45. 65 Northern Cape Dept. of Education. EMIS data 2012 Q1. 66 Northern Cape Dept. of Education. EMIS data 2012 Q1. 67 Dikgatlong Municipality. INTEGRATED DEVELOPMENT PLAN 2012/2013. P 10.

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3.7 SOCIO-POLITICAL SUPPORT FOR THE PROPOSED DEVELOPMENT

3.7.1 Alignment with IDP

A bulk infrastructure project must be aligned with and be listed in the Integrated Development Plans (IDP) and Water Services Development Plans (WSDP) of the participating municipalities.68

The bulk water supply project to Holpan is a listed project in the 2012/13 Dikgatlong IDP. It is priority number 5 of the water projects.69

The development of Holpan is listed in the 2012/13 IDP and includes provision of sanitation, electricity, serviced and registered stands, cemetery, community hall, sport facilities, and municipal offices. Furthermore, seven water and sanitation projects are registered MIG projects, detailed in the table below.

Table 19. MIG projects registered70

Number of MIG Registered Project Name Household Value MIG Value Value: Balance who will benefit 260:De Beershoogte Sewage works& 552 21 704 423.51 19 038 968.00 R 150 212.30 network for 552 erven 258:Barkly West:Bulk water supply 4 562 10 250 000.00 8 991 228.00 R 0.00 263:Holpan Water reticulation for 337 erven 337 2 490 000.00 2 184 211.00 R 0.00 262:Stilwater Water Reticulation for 200 200 1 368 000.00 1 200 000.00 R 58 007.58 erven 881:Rooirand Water Reticulation 180 1 267 663.00 1 267 663.00 R 11 992.56 1030:Windsorton:Kutlwano & 1 950 5 040 830.00 4 421 780.70 R 4 421 780.70 Hebronpark:External water & Sewer 1042:Delportshoop:Feasibility Study Water 3 060 484 500.00 425 000.00 R 425 000.00 Treatment works

68 Dept. of Water Affairs (2011) Water services regional bulk infrastructure programme – Framework for implementation. Version V10, January 2011.P27. 69 Dikgatlong Municipality. INTEGRATED DEVELOPMENT PLAN 2012/2013. P 10. 70 CoGHSTA (2011) Copy of final MIG project list, December 2011.

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3.7.2 Municipal support

The Dikgatlong Municipality supports the proposed project and has listed it in its 2012/13 IDP.

3.8 SOCIAL COMPONENT

The Regional Bulk Infrastructure Grant (RBIG) is to finance the social component and to enable economic development. 71

3.8.1 Guidelines on how to calculate the social component

The social component of the project needs to be determined because that is the capital portion that is funded from the RBIG. The social component and enabling economic environment, which are the only components that can be funded by RBIG, include:72

 Basic level of domestic use

 Associated social requirements e.g. schools and clinics

 Social economic development objectives (enablement of economic development)

While the RBIG fund must enable economic development, the proportional capital cost of higher levels of domestic, commercial and industrial uses must be co-funded from suitable sources.73 Thus, the RBIG Programme has been established to supplement funding for regional bulk water infrastructure with the specific purpose to supplement the “social component’’ and the “enabling economic environment only”. 74

71 Dept. of Water Affairs (2011) Water services regional bulk infrastructure programme – Framework for implementation. Version V10, January 2011.P. 16. 72 Department of Water Affairs and DFID. (2008) Funding agency booklet. April 2008. P.8. 73 Blazer, P. (2010) Regional bulk infrastructure grant (RBIG) programme. Presentation to the Portfolio Committee: Water and Environment on 16-17 March 2010. P.6. 74 Department of Water Affairs. Strategic Plan 2010/11-2012/13. P.7.

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In the absence of a manual that details how to calculate the social component of the RBIG, a slide by Constantinides (2011) provides guidance, which was further clarified by comments on the Mamusa RBIG.75

Aspects that were confirmed of Method 1 described in the figure above are: 76

 RBIG acknowledges the indigent definition of the Municipality. Thus, indigent policies need to be referenced and the definition of the Municipality is used. The source of the number of indigents needs to be detailed and assumptions specified.

 “existing total demand” is assumed to mean the total water demand in 2010

 In addition, projections to 2030 in respect of population and water demands need to be made.

It is advised that the method used be based on the circumstances of the project for example: 77

 Method 2: usually applied to projects that address backlogs. The profile of consumers that drive the infrastructure need and their demand is used

 Method 3: used if a project is dedicated to a specific area and related to specific new water supply schemes and not for augmentation of total water supply.

However, Method 2 and Method 3 do not seem to apply to this case.

75 Determining the social component of the Mamusa RBIG for the implementation ready study- Draft for discussion 20 January 2012. Response from Constantinides received per email via Mr Jasper Fourie (DWA) dated 1 February 2012. 76 Determining the social component of the Mamusa RBIG for the implementation ready study- Draft for discussion 20 January 2012. Response from Constantinides received per email via Mr Jasper Fourie (DWA) dated 1 February 2012. 77 Determining the social component of the Mamusa RBIG for the implementation ready study- Draft for discussion 20 January 2012. Response from Constantinides received per email via Mr Jasper Fourie (DWA) dated 1 February 2012.

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Figure 12. How to calculate the social component78

In addition to the criteria above, the following average water demands can be used, detailed in the table below.

Table 20. Water supply parameters for indigent households79

Level of supply Litres per capita per day Full 80 Yard connection 55 Communal standpipe 25

Allowance can be made for the following factors in the calculation of the social component:80

 Peak demand which may vary for different entities and times e.g. domestic, industrial, commercial (Red Book should be consulted)

 Seasonal factors for holiday towns can deter the determination of the social component, which then needs to be calculated on an individual basis

78 Constantinides, G. (2011) Presentation at RBIG Stakeholder workshop ‘Planning, funding process guidelines and master plans’ on 15 February 2011. Addendum E. Department of Water Affairs. Slide 7. 79 Email from Mr J Fourie dated 15 September 2012. 80 Email from Mr J Fourie dated 15 September 2012.

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 Water losses of 15% are acceptable which may be added to the social component

 In rural area where standpipes or yard connections are provided, stock water can be added although it should not exceed 80 litres per capita per day

 Fire flow, which must be illustrated as a ratio of social and economic provision

 A scheme with different large components, may require a social component to be determined for each component

3.8.2 The Windsorton - Holpan project

This project entails the long-term provision of a bulk water supply from the surface source namely the Vaalharts scheme via the Klipdam-Barkly Canal to the settlement of Holpan. The proposed upgrade of Windsorton WTW will increase the existing capacity/requirement of Windsorton by 312 Kℓ/day and for Holpan to 117 Kℓ/day.81 Provision for a 15% water distribution loss is made in the social component calculation below.

The scope of works includes:82

 abstraction from the Vaalharts water scheme at the Klipdam-Barkly Canal to the Windsorton water treatment works (excluded from the RBIG application)

 new raw water storage dam

 upgrading of the Windsorton water treatment works

 construction of new 40 Kℓ/hour module

 construction of a pump station and pipeline to the Holpan elevated reservoir

Norms used

81 Email received from F. van Loggerenberg, WorleyParsons on 11 April 2013. 82 WorleyParsons (2012) Windsorton/Holpan regional bulk water supply scheme. Presentation to RBIG on 29 August 2012.

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The water requirements of the population and associated social requirements are determined using a set of norms that are highlighted in the table below. Based on these norms the proportion of water that can be allocated to indigents and associated users is calculated.

Table 21. Norms used in the water allocation per category

Water use per day in Category Source Comment litres Specified in the Indigents 80 per capita RBIG Strategic Non-indigents 25 per capita framework for water services83 Schools (day) 20 per learner Red Book84 Based on actual learners per school Schools (boarding) 140 per learner Red Book Based on actual board numbers Hospitals 300 per bed Red Book Based on number of used beds Based on 3.5 visits per person to a clinic Red Book specifies per annum which is the target of the Dept. Clinics 20 per outpatient visit 5l, which is of Health. However, if current use is higher considered too low. than the 3.5, the actual number is used. Community halls 90 per seat Red Book Seats estimated at 2.5% of population Assumed to be the same as learners at Crèches 20 per leaner schools, learners estimated at 10% of total school leaners

3.8.3 Social component for the project

Based on the norms, number of indigents and associated users, the social component of the project is calculated based the assumptions of Method 1 outlined above, projected to 2030, and applied to the project. The portion of the project that delivers water to the social component is 72.94%, which implies that this proportion of the project cost can be funded from RBIG.

83 DWAF (2003) Strategic framework for water services. P68. 84 CSRI Building and Construction Technology (2000) Guideline for human settlement planning and design. Volume 2. P.21.

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Table 22. Calculation of the social component

Water Indigent Supply Users use per Kl per % social populati in kl/day 2030 day in day component on 2030 litres Pipeline Holpan: Indigents Holpan 87.6% 1,091 80 87 99 87.80% Non-indigents Holpan 100.0% 155 25 4 99 3.88% Total pipeline 1,246 91 91.69% Extension of WTW Holpan Indigents Holpan 87.6% 1,091 80 87 99 87.80% Non-indigents Holpan 100.0% 155 25 4 99 3.88% Subtotal 1,246 91 91.69% Extension of WTW Windsorton: Indigents Windsorton 67.6% 679 80 54 265 20.49% Non-indigents Windsorton 100.0% 326 25 8 265 3.07% Subtotal 1,005 62 23.56% Associated users of extension of Users Users WTW: 2012 2030 Schools (day) learners 1,392 2,059 20 41 265 15.53% Schools (boarding) 0 0 140 0 265 0.00% Crèche learners 139 206 20 4 265 1.55% Hospital beds 0 0 300 0 265 0.00% Clinic outpatients (headcount p.a.) 29,754 20 2 265 0.61% Community hall seats 213 90 19 265 7.21% Subtotal 66 24.91% Total WTW Windsorton 48.48% TOTAL social component in % 72.94%

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4 ECONOMIC CRITERIA

Another aspect that needs to be addressed is the economic criteria, which is set out in this section. According to the TOR85, economic aspects that need to be addressed are:

(a) Number of current businesses and industries to be served by type and water use category

(b) Expected economic value to be generated by businesses as a result of the project

(d) Regional economic and value chain benefits integrated into overall development objectives such as socio-economic goals, growth and development objectives, IDPs and associated sector programmes for example housing

Each of the above aspects is discussed in the context of the proposed project area and its impact on the economy of the area it serves.

4.1 NUMBER OF BUSINESSES AND INDUSTRIES TO BE SERVED

The types of business that are located in Windsorton are what can be described as ‘run-of-the-mill’ types which are “dependent on, and limited by, local demand” and if there is only a small demand, which is the case in Windsorton, the entrepreneurial space is small. 86 ‘Run-of-the-mill’ type business would include petrol stations, Bed & Breakfasts, butchers, grocers, hardware supplies, etc.

There are no formal businesses located in Holpan.

85 Water Services. Terms of reference: Feasibility study and implementation ready study for the regional bulk infrastructure grant programme (RBIG). January 2011. Page 18. 86 Toerien, D.F. and Seaman, M.T. (2012) ‘Proportionality in enterprise development in South African towns’, South Africa Journal of Science, 108(5/6):588.

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4.2 EXPECTED ECONOMIC VALUE TO BE GENERATED BY NEW BUSINESS

4.2.1 Multipliers

The relationship between the initial spending and the total effects generated by the spending is known as the multiplier effect of the sector, or more generally the impact of the sector on the economy as a whole. A multiplier expresses the total effects (including the direct, indirect and induced effects) of a specific activity or a change in some activity. Therefore, a multiplier of 1.6 indicates that for every R 1.00 spent (direct expenditure) an additional R 0.60 is generated within the economy. 87

Types of multipliers include production, value-added and employment multipliers. An employment multiplier, for example, shows the total increase (decrease) in employment given an increase (decrease) of one unit of output in an industry. Multipliers are often used to illustrate the significance of an industry or activity in the overall economy. 88 Economic multipliers can be used to estimate the possible macro-economic impacts of changes or shocks experienced at micro-economic level. Economic multipliers only provide estimates of the total impact resulting from an initial change in economic output (i.e. final demand). Furthermore, multipliers vary extensively from one industry to another, which depends on where production input purchases are made in a specific industry or activity.89 Using the average multiplier for an industry may therefore overestimate or underestimate the real impact on a specific industry.90

Nevertheless, economic impact is determined based on the operational and maintenance costs of the project and its related infrastructure. The annual O&M cost of the Holpan project is R 2,769,516.00 excluding capital and redemption as shown in the table below.

87 Taljaard, P.R., Van Schalkwyk, H.D. and Louw, D.B. (2008) Market risk, water management and the multiplier effects of irrigation agriculture with reference to the Northern Cape. P.21. 88 Taljaard, P.R., Van Schalkwyk, H.D. and Louw, D.B. (2008) Market risk, water management and the multiplier effects of irrigation agriculture with reference to the Northern Cape. P.21. 89 Taljaard, P.R., Van Schalkwyk, H.D. and Louw, D.B. 2008. Market risk, water management and the multiplier effects of irrigation agriculture with reference to the Northern Cape. WRC report number: 1250/2/08. P. 133. 90 Miller (1999) cited in Taljaard, P.R., Van Schalkwyk, H.D. and Louw, D.B. (2008) Market risk, water management and the multiplier effects of irrigation agriculture with reference to the Northern Cape. WRC report number: 1250/2/08. P. 133.

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Table 23. Estimated operation and maintenance costs of the project91

OPERATION & MAINTENANCE RELATED COSTS AMOUNT (VAT included) Raw water costs (496 400 Kℓ/annum @ R4.00/Kℓ) R 1 985 600.00 Treatment cost R 366 168.00 Labour (use existing operators) R 401 280.00 Mechanical/Electrical (4% of Mechanical/electrical capital cost) R 105 336.00 Civil/Buildings/Pipelines (2.5% of Civil/Buildings/Pipelines capital cost) R 614 460.00 TOTAL O&M COST PER ANNUM R 3 472 844.00

There are three types of multipliers that are determined for this project namely:

 Direct: attributable to the project’s direct investment in operation and maintenance

 Indirect: attributable to the additional supply and demand for local goods and services vendors

 Induced: attributable to increased household expenditures as a result of direct and indirect investment for example wages paid

Employment

Labour multipliers or employment creation are key elements in any production process. Labour multipliers measure job creation and its contribution towards distributing salaries and wages that impact positively on the alleviation of poverty.

The figure below depicts the labour multipliers calculated for the economic activities in the South African economy.92 Direct labour multipliers for economic activities ranged from a low of 1.7 in the case of communication and electricity, water and gas; to a high of 91.3 in the case of domestic activities, which only consists of value added. The weighted total labour multiplier is 17.8 for all sectors where the direct, indirect and induced effects from a R1 million change in production results in 17.8 full time jobs.

91 Received per email from Mr F. van Loggerenberg, WorleyParsons on 11 April 2013. 92 Taljaard, P.R., Van Schalkwyk, H.D. and Louw, D.B. 2008. Market risk, water management and the multiplier effects of irrigation agriculture with reference to the Northern Cape. WRC report number: 1250/2/08. P. 134.

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The indirect multipliers measure the impact (backward linkage) that a particular sector will have on all other industries that supply inputs to that particular sector, and more specifically the indirect labour multipliers, which provide an indication of the full-time job opportunities created in the input-supplying sector because of a R1 million increase in the original sector.93

Figure 13. Labour multipliers94

The induced effects measure the economic impact that will result from salaries and wages paid out to employees in both the particular or direct activity and the input-supplying sectors. These additional salaries and wages lead to an increased demand for various consumable goods that need to be supplied by various economic activities throughout the broader economy.95

93 Taljaard, P.R., Van Schalkwyk, H.D. and Louw, D.B. 2008. Market risk, water management and the multiplier effects of irrigation agriculture with reference to the Northern Cape. WRC report number: 1250/2/08. Page 134. 94 Data source: Taljaard, P.R., Van Schalkwyk, H.D. and Louw, D.B. 2008. Market risk, water management and the multiplier effects of irrigation agriculture with reference to the Northern Cape. WRC report number: 1250/2/08. Page 135 Table 6.1. 95 Conningarth (2005) cited in Taljaard, P.R., Van Schalkwyk, H.D. and Louw, D.B. 2008. Market risk, water management and the multiplier effects of irrigation agriculture with reference to the Northern Cape. WRC report number: 1250/2/08. Page 135.

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Figure 14. Employment based on labour multipliers of the electricity, water and gas sector applied to the operation and maintenance phase of the project

Considering the electricity, water and gas industry norms of 1.7 direct, 3.5 indirect and 5.9 induced jobs, the labour estimates are made for the operation and maintenance of the project. Thus in terms of employment, it is estimated that less than 4.5 direct jobs, 9.3 indirect jobs and 15.6 induced jobs are created during the O&M of the Windsorton/Holpan project. Total jobs are 29.4 based on the multiplier.

Production

The economic term “production” refers to the total turnover (i.e. quantity produced multiplied by the corresponding price) generated by each activity/sector in the economy, which can be measured as the sum of the intermediate inputs plus the total value added by a specific sector.96 The production multipliers (i.e. direct, indirect and induced effects) for economic activities are shown in the table figure below.

96 Conningarth (2005) cited in Taljaard, P.R., Van Schalkwyk, H.D. and Louw, D.B. 2008. Market risk, water management and the multiplier effects of irrigation agriculture with reference to the Northern Cape. WRC report number: 1250/2/08. Page 136.

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Figure 15. Production multipliers97

The direct multipliers equal 1 (i.e. production divided by itself). At 0.86 the indirect multiplier for electricity, water and gas is lower than in the manufacturing and construction sectors and similar to most sectors that have indirect multipliers of less than 1. This implies that a R1 increase in production in the electricity, water and gas sector will have a backward effect of R0.86 (i.e. increase in sales) on the economic sector supplying inputs.

The induced effects of the electricity, water and gas sector amounts to 1.86 indicating that because of the additional salaries and wages paid out due to the original R1 increase in production in the electricity, water and gas sector, increased consumer spending totalling R1.86 will result. Together the total production multipliers for electricity, water and gas is R3.72. The Holpan project should deliver a total production of R 2.64 million based on the O&M annual expenditure, of which R2.27 million would be indirect and R4.92 million induced production.

97 Data source: Taljaard, P.R., Van Schalkwyk, H.D. and Louw, D.B. 2008. Market risk, water management and the multiplier effects of irrigation agriculture with reference to the Northern Cape. WRC report number: 1250/2/08. Page 137.

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Figure 16. Estimated production multipliers of the operation and maintenance phase of the project

Value-added

Gross domestic product (GDP) is the sum of the value added of all the sectors in an economy. Value added therefore measures the value that is added to each product produced in an economy by the various economic sectors at each stage in the production process. 98 Value added is calculated as the difference between the revenue earned by the sector and the amount it pays for the products of other sectors that it uses as intermediate goods in the production process. Thus, value added consists of three elements, namely remuneration of employees, gross operating surplus (which includes profits and depreciation), and net indirect taxes.

Compared to the other economic sectors, electricity, water and gas sector is average, with the lowest value added multiplier being 0.22 in the case of manufacturing activities and the highest being 1.00

98 Conningarth (2005) cited in Taljaard, P.R., Van Schalkwyk, H.D. and Louw, D.B. 2008. Market risk, water management and the multiplier effects of irrigation agriculture with reference to the Northern Cape. WRC report number: 1250/2/08. Page 138.

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for domestic services. The electricity, water and gas sector has a value added multiplier of 0.5 direct, 0.36 indirect and 0.39 induced, resulting in a total weighted value-added multiplier of R 1.25. 99

Figure 17. Value added multipliers100

Value-added multipliers calculated for the economic activities are shown in the figure below. In terms of electricity, water and gas activities, on average R 360,000.00 worth of indirect value is added to every R1 million of sectoral activity. Given an induced effect of R 390,000.00 i.e. increased consumer spending resulting from the increases in salaries and wages paid in the specific sector as well as the input-supplying sector, the total value-added multiplier for electricity, water and gas amounts to R1,25 million. Thus, R1 million worth of electricity, water and gas production results in R1.25 million worth of additional value added.

99 Taljaard, P.R., Van Schalkwyk, H.D. and Louw, D.B. 2008. Market risk, water management and the multiplier effects of irrigation agriculture with reference to the Northern Cape. WRC report number: 1250/2/08. Page 138. 100 Data source: Taljaard, P.R., Van Schalkwyk, H.D. and Louw, D.B. 2008. Market risk, water management and the multiplier effects of irrigation agriculture with reference to the Northern Cape. WRC report number: 1250/2/08. Page 139.

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Thus, spending on O&M on the Holpan works, there should be a direct value added effect of R1.32 million, indirect effect of R0.95 million and an induced effect of R1.03 million, which totals R 3.305 million.

Figure 18. Value added per R1 million, water, gas and electricity spending

4.2.2 Effects of investment in water infrastructure

The Financial and Fiscal Commission101 has prepared a model, which shows the macro-economic effect of increasing infrastructure. In this model, the commission simulated investment in all water infrastructure and found the following:

 A 10% increase in capital in the water sector leads to an increase in the output of water and related sectors

 GDP increases by 0.02% and consumer prices fall by 0.04%

 Wages increase by 0.01% because labour becomes more expensive due to the increase in capital. The urban highly skilled workers contribute most to this increase.

101 Financial and Fiscal Commission. 2010. Technical report: Annual submission on the division of revenue 2010/2011.

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 Employment generally falls due to the reduction in the overall price of capital.

Table 24. Macroeconomic effects of a 10% increase in water infrastructure102

Variable Variation (%) Price index -0.02 Import 0.01 Export 0.00 Unemployment rate*103 0.01 Wage 0.01 Rent -0.06 Consumer Price Index (CPI) -0.04 Consumption 0.03 Saving -0.19 Investment price 0.15 Investment 0.02 GDP 0.02 Employment -0.01 Employment urban 0.00 Employment rural -0.10 Gross wage high skilled 0.05 Gross wage low skilled -0.03 Gross wage high skilled urban 0.05 Gross wage low skilled urban -0.02 Gross wage high skilled rural -0.01 Gross wage low skilled rural -0.15 Gross wage urban 0.01 Gross wage rural -0.12

Water service infrastructure O&M consumes manufactured products, such as chemicals and pumps, and services such as electricity and insurance. As the water supply or treatment increases, this induces an increase in the demand of products and services resulting to an increase in these products. Subsequently sectors that use great quantities of water such as agriculture, food

102 Financial and Fiscal Commission. 2010. Technical report: Annual submission on the division of revenue 2010/2011. Page 35 Table 14. 103 Variations computed as percent changes *except for unemployment expressed as percentage point change.

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manufacturing and mining, benefit from the reduced prices and increased output. The increased supply in these sectors leads to reduced prices in the affected sectors.104

About household welfare, the Financial and Fiscal Commission found that there is zero effect, with changes in the cost of living being exactly offset by changes in disposable income.105

While providing water does not necessarily result in economic growth, a lack of water or poor water quality can and does inhibit growth. The challenge of the water sector is to align the provision of water with the spatial and sectorial growth of the economy.107 Water infrastructure is an intermediate input and its efficient reliable supply raises the profitability of production and thus enhances the marginal productivity of labour and capital. Substantial number of hours without water has a negative effect on productivity.

In a study of how water cuts affect productivity, it was found that water disruptions significantly affect productivity, which suggests that water is important in fostering economic growth. Hence, there is a need for the South African government to initiate water infrastructure projects that minimise the occurrence of water cuts. Not only are water assessments required, but the development of water resources and appropriate management systems. The development and maintenance of quality water infrastructure is central to achieving economic growth.108

104 Financial and Fiscal Commission. 2010. Technical report: Annual submission on the division of revenue 2010/2011. 105 Financial and Fiscal Commission. 2010. Technical report: Annual submission on the division of revenue 2010/2011. 106 Juana, J.S. 2008. Efficiency and equity considerations in modelling inter-sectoral water demand in South Africa. Thesis. University of Pretoria. February 2008. 107 Department of Water Affairs and Forestry (2008) Strategic framework for sustainable growth and development – A discussion document. May 2008. P.3. 108 Moyo, B. (2011) Do water cuts affect productivity? Case study of African manufacturing firms. Water SA, 37(3):349-356. [Online]. Available from:

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4.3 NUMBER OF SMMES AND BEE ENTERPRISES TO BENEFIT FROM PROJECT

All regional bulk projects must identify and specify the amount of anticipated involvement and benefit of SMMEs and BEE enterprises.109

The development of enterprises participating in the construction sector is targeted in the following categories:110

 Suppliers of construction equipment and materials

 Professional service providers e.g. environmental, engineering, quality survey, geology, land surveyors, etc.

 Built environment service providers such as fencing, painting, civil, mechanical, electric, electronic specialist sub-consultants

 Outsourcing and possible privatisation of certain functions that are undertaken by established or parent organisation e.g. internal bus transport services, internal construction and maintenance units

In terms of scoring BEE in the project, “A user’s guide to the forestry sector BBBEE Charter and scorecard” could be applied.111 The construction sector in its Charter of Broad-based Black Economic Empowerment has set ownership targets, which should be achieved by 2013:112

 30% economic interest held by black people and 30% participation by black people in voting rights

 10% economic interest held by black women and 10% participation by black women in voting rights

http://www.wrc.org.za/Knowledge%20Hub%20Documents/Water%20SA%20Journals/Manuscripts/2011/03%20J uly%202011/2603.pdf (Accessed: 3 October 2011). 109 Dept. of Water Affairs (2011) Water services regional bulk infrastructure programme – Framework for implementation. Version V10, January 2011.P. 19. 110 Department of Public Works (2006) Construction Sector: Broad-Based Black Economic Empowerment Charter. Version 6 (Final) 26-01-06. P.14. 111 Department of Water Affairs and Forestry (2007) A users guide to the forestry sector BBBEE Charter and scorecard. Version 8 June 2007. 112 Department of Public Works (2006) Construction Sector: Broad-Based Black Economic Empowerment Charter. Version 6 (Final) 26-01-06. P.9.

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 10% (5% for BEPs) economic interest held by black broad based groups and or black designated groups, specifically black employees

In addition:

 Procurement from local enterprises, specifically micro and small enterprisers with black ownership exceeding 50% should be preferred where appropriate. 113

 Skills development should be a specific complement of the construction where 1.5% of payroll is spent on skills development, of which 70% is spent on black people and 25% is spent on black women. 114

Cooperate social investment initiatives can be made during construction by contributing to projects and registered NGOs that benefit black people primarily and promote development in under resourced areas. Projects may include community education and training, career guidance, maths and science initiatives in schools, support conservation projects, community clean up campaigns and environmental initiatives, support arts and culture development programmes, health programmes sport programmes. 115

The provisions and target values for SMME, BEE and labour are proposed as follows:116

 Affirmative Black Enterprises (ABE) Target values: 25% of goods, services and materials

 Black Enterprises (BEs): 15% of 25%

 Black Empowered Enterprises (BEEs): 20% of 25%

 Small, Medium and Macro Enterprises (SMMEs): 10% of 25%

 Local Enterprise (LEs): 1% of 25%

 Labour: 15%

 Local labour: 60% of 15% (person days)

113 Ibid. P.12. 114 Ibid. P.10. 115 Ibid. P.15. 116 Adapted from DWA in-house construction team values.

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 Minimum labour content: 15% of contract price (CP)

Should these provisions be applied to the Windsorton/Holpan project, it is estimated that a contract value of R35.4 million is distributed to local labour, SMME, BEE as detailed in the figure below. Please note that the values in the figure below are not cumulative.

Figure 19. SMME, BEE and local labour target estimates for the project

4.4 REGIONAL ECONOMIC BENEFIT FROM PROPOSED PROJECT

4.4.1 Socio-economic features

A few characteristic features of the socio-economic profile of the peoples of Dikgatlong, Ward 4 and 5 from the 2011 Census are detailed below:117

117 Statistics South Africa, Census 2011.

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 Approximately 50% of the Ward 4 and 5 persons aged 20 years and older have no schooling, and those with Gr 12 and above is lower than the Dikgatlong average too

 Approximately 28% of person in Ward 4 and 5 are attending an educational institution, similar to the municipal average

 Approximately 59% of persons in Ward 4 and 5 are aged between 15 and 59 years, while Ward 5 has a higher proportion of elderly people aged 60 and above (8.5%) than Ward 4 (6.7%).

 Gender distribution is balanced.

 49.6% and 44.4% of persons in Ward 4 and 5 respectively aged between 15-65 years have no personal income and 10% of households reported having no income, while 24% live in income poverty (less that R9,600 pa)

4.4.2 Employment and unemployment

The unemployment rate can be regarded as a good measure of economic activity. Using the official definition for ‘unemployment’, unemployment patterns to Quarter 1 of 2012 showed that the Northern Cape’s unemployment rate decreased to 24.9% from 25.0% in 2001. The province ranks the fourth lowest nationally in respect of unemployment; and second lowest nationally in terms of discouraged work-seekers in 2012.118 Furthermore, the 2012 Labour Force Survey reported that 5.4% of Northern Cape’s economically active population interviewed (compared to 5.3% nationally) were involved in uncompensated work for the benefit of the community. 119

The employed and unemployed together make up the economically active population.

Unemployment refers to people within the economically active (15-65 years) population who did not work during the seven days prior to the interview, want to work and are available to start work within a week of the interview and have taken active steps to look for work or to start some form of self- employment in the four weeks prior to the interview. The economically active population in Northern

118 Statistics South Africa. 2012. Labour force survey Quarter 1, 2012. Statistical release P0211. Pxvi. 119 Statistics South Africa. 2012. Labour force survey Quarter 1, 2012. Statistical release P0211. Pxvi.

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Cape in 2001 was 400,000 persons and by 2012, it declined to 286,000. 120 Of this, 33.8% were unemployed, using the expanded definition, in 2012, which is a decrease from 44% in 2001.

According to the 2011 Census, the economically active population in Dikgatlong was 15,046 people of which 48% were unemployed (included discouraged work-seekers), which was higher than the Northern Cape average of 38.6%. The rate of employment was higher in Dikgatlong (52%) than in Ward 4 (50%), and Ward 5 that showed a lower employment rate of 42%.

Table 25. Employment status 2011121

Ward 4 Ward 5 Dikgatlong

Official employment status Persons % Persons % Persons % Employed 845 50% 751 42% 7,841 52% Unemployed 602 35% 620 35% 5,164 34% Discouraged work-seeker 258 15% 411 23% 2,041 14% Subtotal economically active 1,705 100% 1,782 100% 15,046 100% Other not economically active 2,113 2,018 14,510 Not applicable 2,433 2,462 17,286 Subtotal not economically 4,546 73% 4,480 72% 31,796 68% active Total 6,250 100% 6,264 100% 46,841 100%

4.4.3 Sector of employment

All economic sectors within the Northern Cape, except agriculture, utilities and construction lost jobs from 2008 to 2009. During this period, the Northern Cape Province had the greatest increase in agricultural jobs. Between 2011 and 2012, mining, manufacturing, construction, trade and financial sectors gained jobs.

120 Statistics South Africa. 2012. Labour force survey Quarter 1, 2012. Statistical release P0211.P12. 121 Data source: Census 2011.

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Table 26. Northern Cape employed by industry 122 123

Year-on- Apr-Jun Apr-Jun Jan-Mar Year-on-year year change 2008 2009 2012 change in % in % Agriculture 48 000 57 000 18.75% 47 000 -11.3% Mining 14 000 11 000 -21.43% 16 000 45.5% Manufacturing 14 000 10 000 -28.57% 16 000 14.3% Utilities 1 000 3 000 200.00% 4 000 Construction 15 000 22 000 46.67% 19 000 35.7% Trade 55 000 42 000 -23.64% 41 000 17.1% Transport 10 000 12 000 20.00% 10 000 -28.6% Finance 23 000 19 000 -17.39% 24 000 60.0% Community and social services 81 000 78 000 -3.70% 83 000 5.1% Private households 35 000 28 000 -20.00% 25 000 0.0%

In 2001, the main sector of employment in Northern Cape was agriculture and hunting (22%) followed by community, social and personal services. By 2007, this had changed to community, social and personal services (23%) followed by agriculture (19%) and wholesale and retail trade (15%).

In 2007, Dikgatlong’s the main sector of employment was mining and quarrying, followed by manufacturing and then community, social and personal services.

Figure 20. Sector of employment 2007 in Dikgatlong124

122 Statistics South Africa. 2010. Quarterly labour force survey, Quarter 2, 2010. P0211. Pretoria: Statistics South Africa. 123 Statistics South Africa. 2012. Labour force survey Quarter 1, 2012. Statistical release P0211.Pxvi.

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4.4.4 Economic sector contribution to GDP

Mining accounts for a major proportion of South Africa’s annual export earnings. The Northern Cape economy is dominated by the mining and quarrying sector. Whereas mining and quarrying accounts for 24% of the GVA of the Northern Cape economy, it accounts for 12% in Dikgatlong. Dikgatlong’s main sector in terms of GVA contribution is manufacturing (33%), community services (22%) followed by mining (12%) and finance (11%).

Table 27. Percentage contribution to Gross Value Added 2010 (in R’000 and constant 2005 prices)125

2010 Gross Value Added (in Dikgatlong Dikgatlong Northern Cape Northern Cape R'000 and constant 2005 (including (including Total Total prices) FBDMA) FBDMA) Agriculture R 35,406 R 2,264,424 5% 6% Mining R 79,499 R 8,302,029 12% 24% Manufacturing R 219,900 R 1,344,831 33% 4% Electricity R 13,010 R 687,153 2% 2% Construction R 7,802 R 660,973 1% 2% Trade R 29,420 R 4,047,559 4% 11% Transport R 51,462 R 3,627,681 8% 10% Finance R 73,217 R 5,158,685 11% 15% Community services R 147,704 R 9,143,128 22% 26% Total R 657,421 R 35,236,462 100% 100%

124 StatsSA. Community Survey 2007. 125 Global Insight

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Figure 21. Sector contribution to gross value added 2010 in Dikgatlong126

The figure below illustrates the relative importance of the Dikgatlong economy among other Northern Cape municipalities. Dikgatlong’s contribution to the GDP of the Northern Cape ranks 13th.

126 Global Insight

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Figure 22. Contribution of municipalities to the Northern Cape GDP 2010127

127 Data source: Global Insight

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4.4.5 Estimated GDP 2030

The GVA, measured in constant 2005 prices, has grown in the Northern Cape at an average rate of 2.6% per annum between 2001 and 2010, compared to an average growth of 1.9% between 1996 and 2011. However, Dikgatlong recorded negative growth rates over both periods.

Figure 23. Dikgatlong’s growth in GVA 1996-2010 compared to the Northern Cape average128

In 1996, Dikgatlong’s GDP was estimated at R892 million (in 2005 constant prices). Should this negative tendency continue in a linear trend illustrated on the figure adjacent, gross value added should fall to approximately R650 million in 2030.

128 Data source: Global Insight

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Figure 24. Growth in Dikgatlong's GDP to 2030129

129 Source: Derived from Global Insight

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5 TECHNICAL CRITERIA

5.1 MASTER PLAN PROPOSAL

The proposed project was identified in the Reconciliation Strategy for Windsorton Town in Dikgatlong Local Municipality in the Lower Vaal WMA in May 2011 (attached as Annexure D).

The Dikgatlong Municipality IDP (2012/13), attached as Annexure A, further identifies the necessity for the upgraded infrastructure.

The Department of Water Affair’s Northern Cape Regional Office has also been involved in the decision making process with regards to appropriate water resources in the area. Numerous studies have been conducted by both the geo-hydrological section of DWS, as well as external independent consultants, to find an alternative water source for Holpan. A hydro-census of all available groundwater resources around Holpan was also conducted.

5.2 APPROPRIATENESS AND ACCEPTABILITY OF THE SOLUTION

5.2.1 Acceptability of the Solution

Dikgatlong Municipality appointed WorleyParsons RSA (previously named KV3 Engineers) to report on the existing primary water supply situation for the town of Holpan and Windsorton and prepare a feasibility study to implement a regional bulk water supply scheme. The report was completed in October 2007 and accepted by the Municipality.130

Several scenarios were investigated of which the following three were seen as feasible options which had to be studied in more detail:

 Scenario 1: Supply raw water to Holpan by means of the Vaalharts KB canal and provide Holpan with a water treatment package plant. Windsorton will be operated as present with no additional upgrade.

130 Windsorton / Holpan Regional Bulk Water Supply Feasibility Report October 2007

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 Scenario 2: Supply raw water to Holpan by means of the Vaalharts KB canal and provide Holpan with a water treatment package plant. Provide Windsorton WTW with a third module.

 Scenario 3: Provide a third module at Windsorton to meet both Windsorton’s and Hoplan’s demand up to 2030 and construct a bulk supply rising main to Holpan.

A capital and operational & maintenance cost analysis was done for the three scenarios which concluded that the operational cost of Scenario 1 and Scenario 2 was very high, as four new operators have to be identified, trained and stationed at Holpan to operate the new module.

By adding a third module at the existing Windsorton works, the current operators can be used to operate and maintain the new module. It is however, proposed that Module 3 includes a backwash- water recovery system for the complete plant. It is estimated that up to 70 % of the water which is lost though back washing and draining of settling tanks, will be recovered. The recovered water will be returned to the raw-water storage dams. This will substantially alleviate the demand from the Vaalharts Water Scheme. Provision will also be made for construction of sludge ponds for the storage and drying of water sludge wasted from the settling tanks.

The first Implementation Readiness Study (IRS) report was handed in to DWS and the Dikgatlong Municipality April 2009 and approved.131 The project could not be implemented at that stage because funding was unavailable. In the intervening period DWS altered the IRS format and therefor the process of getting this project implementation ready had to be reviewed and a revised report prepared.

5.2.2 Existing capacity of infrastructure vs. demand

Windsorton

The population of Windsorton (including Hebronpark & Kutlwano) is projected to increase from 6 250 persons in 2011 to 7 255 persons in 2030 (approximately 16% over the planning period). This brings about an increase in the Average Annual Daily Demand (AADD) of 761 m³/d to a total AADD of

131 Implementation Readiness Report Windsorton/Holpan Regional Bulk Water Supply Scheme For Department of Water Affairs & Forestry (DWAF) – April 2009

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888 m³/d in 2030. The AADD was calculated based on the assumption that the indigent per capita use is 80 ℓ/d and the non-indigent per capita water use is 189 ℓ/d. The actual water use indicates a per capita use of more than 465 ℓ/d, which will have to be reduced by implementing water conservation and demand management measures.

Windsorton obtains its bulk water supply from the Vaal River via the Vaalharts Irrigation Scheme Canal (refer to Section 5.4 for water allocation details). Water is abstracted from the Klipdam-Barkly canal into two raw water storage dams. From the storage dams, water is treated and stored in a 0.6Mℓ reservoir. Water is then pumped to two adjacent reservoirs with a combined volume of 1Mℓ at equal elevation. The outlet pipes of both the reservoirs are metered and potable water is distributed via two bulk water supply lines to Windsorton, Hebronpark and Kutlwano. The existing water treatment works (WTW) is operating 24 hours a day at peak demand periods.

The WTW, constructed in 1993, was recently upgraded from a 15 m³/h (based on a filtration rate of 5 m³/h) with an additional design volume of 30 m³/h, bringing about a total capacity of 45 m³/h. Both the existing and new modules were based on the Aquaspring designs.

An upgraded WTW is required because it is operated 24 hours per day (whereas an operation period per day of 16 to 20 hours is recommended during peaks). In addition, the demand from Holpan to augmentation its water sources further requires increased capacity.

Holpan

The population growth of Holpan is projected at 56% over the period from 2011 to 2030. This implies that the 2011 population of 798 persons will increase to 1 246 persons in 2030. As a result, the AADD is projected to stabilise at 117 m³/d in 2030.

The demand is met by several boreholes that are not sustainable especially during drought occurrences as indicated in a groundwaterr investigation report. The existing production boreholes (HP1 and HP2) could be pumped at 0.45 ℓ/s and 0.40 ℓ/s for 8 hours per day respectively. A third borehole with a yield of 7.0 ℓ/s also for an 8 hour per day pumping period was sited, drilled and equipped. The groundwater is pumped via 110mm Ø uPVC pipe over a distance of 1 200m to a

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0.122 Mℓ elevated steel reservoir which relate to 45 hour storage in 2011 and 25 hours in 2030. From the elevated reservoir, water is gravitated and metered to the residential area of Holpan.

The outcomes of the yield testing of production boreholes in the Holpan vicinity for Dikgatlong Municipality, which was conducted by SRK Consulting Engineers & Scientists, can be seen in Table below.

From the table below it can be seen that the current available groundwater for Holpan is 321 m³/d i.e. 188 160 m³/year. The calculated AADD for Holpan (2030) is 117 m³/day. It therefore seems to be a viable option to develop additional groundwater sources for Holpan. However the sustainability of these boreholes cannot be guaranteed, since farming and mining activities are a priority in the area.

Table 28. Yield test results - SRK Study

Max Max Duration Recommended Recommended Borehole No Pump Yield (L/s) (Hours/day) Abstraction Abstraction (m3/day) (m3/month)

HP1 (currently in use) 0.45 8 13 390

HP2 (currently in use) 0.40 8 12 350

HP03/D (can be develop) 0.50 12 22 650

HP03/H (can be develop) 2.00 10 72 3 890

HP03/I (currently in use) 7.00 8 202 10 400

321 15 680

188 160 m3/annum

Combined Infrastructure vs. Demand

The table below summarise the infrastructure capacity vs. the demand. An overall demand deflect of 620 m³/d is evident and will have to be accommodated for the planning horizon to 2030.

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Table 29. Infrastructure capacity vs. demand

Demand (m³/d) Storage Volume Kℓ Less other Demand Required Area Demand sources or Deflect demand Existing Storage including Storage AADD existing for the IRS Capacity losses Capacity infrastructure Windsorton 888.00 1 184.00 720.00 464.00 1000.00 1776.00 Holpan 117.00 156.00 0.00 156.00 122.00 234.00 TOTAL 1 005.00 1 340.00 720.00 620.00 1 122.00 2 010.00

* Please note that 25% has been added to the daily demand to cater for the water losses during the back wash process.

From the table it is evident that the total water demand of the proposed water scheme is 1 340 m³/day. From the demand calculations, the capacity of the additional water treatment module will have to deliver 40 m³/hour, which gives a combined capacity of 85 m³/hour (existing module = 45 m³/hour). The plant will therefore deliver 1 360 m³/day based on a 16 hour operation per day.

Additional storage is also required as indicated. The storage of Holpan will not be increased as part of this project since the availability of two water sources reduces the water supply risk. The storage can be increased at a later stage if required.

5.2.3 Infrastructure description

Windsorton

The water purification plant is situated to the west of the town of Windsorton with a capacity of 45 m³/h or 720 m³/d (including losses, operated at 16 hours per day). The process train employed is typical of a conventional surface water purification plant, and consists of the following treatment units:

 Chemical addition

 Rapid mixing

 Flocculation

 Sedimentation

 Rapid sand filtration

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 Disinfection

Raw water is withdrawn from the raw water dams and is pumped to the purification plant. The raw water pumps are protected by a coarse in-line strainer. Each treatment module is supplied by two raw water pumps. This is to ensure that a duty/standby arrangement is available at all times.

The flow of raw water to the works is controlled and monitored by a flow control valve located on the delivery line to the purification plant.

A chemical flocculant (Süd-Fluc) is dosed to aid in the flocculation process. Success of the downstream processes is very dependent on effective flocculation and rapid mixing. No pH correction or coagulant (secondary flocculant) dosing is currently applied at the existing plant.

After flocculant dosing and flash mixing the water gravitates to a flocculation column where low energy mixing takes place. The settling tanks follow the flocculation column. Currently there are 16 settling tanks in operation and the flocculated water is equally split between all. The settling tanks each have a conical shape. The shape and design of the tanks results in the physical separation of the clear water and settled sludge (chemical floc).

Sludge is periodically withdrawn from the bottom of these tanks and wasted. No drying beds or sludge ponds are available for sludge storage and drying. The waste sludge is therefore currently directed to flow into a nearby field.

The clear water gravitates to a surge tank. From this tank the water is withdrawn and pumped to the filters. The flocs and other pollutants not settled in the settling tanks are removed by filtration. Filtration is through a bank of Aquatek F8/50 double media filters.

After filtration, the filtered water is disinfected by means of sodium-hypochlorite. The disinfected clear water then enters the clear water reservoir (± 100 m from the plant) from where it is pumped to the pressure towers before distribution to the end-users.

By adding a third module at the existing Windsorton works, the current operators can operate and maintain the new module. It is however, proposed that Module 3 includes a backwash-water recovery system for the plant. It is estimated that up to 70 % of the water which is lost through back washing

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and draining of settling tanks, will be recovered. The recovered water will be returned to the raw- water storage dams. This will substantially alleviate the demand from the Vaalharts Water Scheme. Provision was also made for construction of sludge ponds for the storage and drying of water sludge wasted from the settling tanks.

Further optimisation with the new proposed plant will include a sedimentation tank with lamella plates to increase the flow to the plant without upsetting the settling of the formed sludge and flocs, and making use of larger diameter filters with anthracite and carbon. Larger diameter filters will ensure less backwashing and wastage of treated water. A blower can also be added to air scour the filters.

The proposed scope of work will entail:

 Construction of a new water storage dam

 Sedimentation tank

 Filters with blower

 Treatment building

 Site works (fencing, earthworks, access, terracing and paving)

 Construction of new wash water recovery ponds

 Sludge ponds

 Disinfection equipment

 Related electrical and mechanical works

The project will ultimately have a peak supply capacity of some 85 m³/hour or 1 360 m³/day (including losses, operated at 16 hours per day). The two existing water purification modules at Windsorton are treating the water to an acceptable standard. The proposed third module will employ the same treatment technology as the first two modules.

Holpan

The infrastructure to be provided will comprise of the following components:

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 Pump station adjacent to the Windsorton water treatment works. Water will be abstracted from the clear water reservoir at the Windsorton WTW and pumped over a distance of approximately 11 km to the elevated storage tank in Holpan.

 Rising pipeline to the elevated storage tank in Holpan. The pipeline will be a 160 mm ND uPVC pipeline.

A general layout of the bulk water supply scheme is included in the Technical Feasibility Report attached as Annexure F.

5.3 OPTIMAL CHOICE OF BULK INFRASTRUCTURE

5.3.1 Water treatment works at Windsorton

Process Design

The existing process design complies with all requirements and is therefore only extended to accommodate the additional demand.

5.3.2 Bulk water scheme for Holpan

Pipe material and diameter

For water supply schemes similar to this one, the most economical pipeline diameter is usually such that the pipeline velocity varies between 0.7 and 2.0 m/s. For this scheme the most economical internal pipe diameter will then be 160 mm. Pipe materials that can be considered within this diameter range are steel, ductile iron (DI), plastic (uPVC, mPVC, tPVC or HDPE) and GRP.

Fibre cement pipes are not manufactured in South Africa anymore. Due to the variable quality of GRP pipes in South Africa, these pipes should not be considered for this project.

For comparison purposes, the supply cost of pipes for the various materials was considered and uPVC was found to be the most cost effective.

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Steel, DI and HDPE pipe cannot be considered for this project. Steel and DI pipe has the further disadvantages that a suitable cathodic protection system needs to be provided and maintained to protect the pipe against external corrosion.

Design criteria

Pipeline Friction Losses

Friction losses in the pipelines were calculated using the Darcy-Weisbach and Colebrook/White equations. Absolute roughness values that were used in the calculation are given below. For comparison purposes, equivalent Hazen-Williams C values are also given.

Table 30. Friction Coefficients

Hazen Absolute Pipe Lining Lining Condition Williams C (-) Roughness k(mm)

Steel pipe Smooth (new) 150 0.025

Epoxy lining Rough (50 years old) 130 0.250

uPVC/mPVC Smooth (new) 150 0.025

Pipes Rough (50 years old) 135 0.200

Pump Stations

The pump station was designed to operate with one duty pump and one standby pump. Velocities at the design flow in the pumps suction pipework were limited to 1.0 m/s and to 2.0m/s in the suction pipework. Operating time for pumps was fixed at 16 hours/day (20 hours/day maximum). All pumps will be fixed speed centrifugal pumps operating at 1 450 rpm.

Pipeline Air Intake and Discharge

In general, air valves were placed at the following positions:

 On pipeline apex points

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 Every 1 000 m on long ascending sections

 Every 1 000 m on long descending sections

 Where required at slope changes to allow effective de-aeration of the pipeline during normal operation

To ensure effective de-aeration of the pipeline during normal operation, small orifice air valves are placed at slope change locations where the downstream pipeline slope is too large to allow the hydraulic transportation of air.

For normal operating conditions, the function of the air valve is to discharge air from the pipeline into the atmosphere. For drainage and pipe burst, it is to allow air into the pipeline to prevent the pipe from collapsing due to the development of negative (sub-atmospheric) pressures.

For air intake, differential pressure across the air valve is limited to not more than 4.0 m and for air discharge to not more than 0.5 m.

Scour Valve Installations

Scour valve installations are designed to limit the scour time to at most 4 hours maximum. Maximum flow velocity in the scour installation pipework was limited to 6.0m/s maximum.

Pipe Bedding

An uPVC pipe is a flexible pipe. To ensure adequate pipe support, the pipe must be bedded within a surround of suitable material to provide adequate support to the pipe. The modulus of soil reaction (Es) is an important parameter in the conventional buckling and deflection and pipe-soil interaction calculations for flexible pipe to assess to suitability of the soil to provide adequate pipe support are required.

Bedding material for normal trench conditions shall consist of clean gravel (AASHTO Type A-1-a) or clean coarse grained soils (AASHTO Type A-2-4 or above) with a maximum particle size of 9.5 mm.

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Pipeline cost optimization

The cost of any pumping scheme is determined by the combined cost of the pump station and the corresponding rising pipeline. All things being equal, the pipeline cost is determined by the pipe diameter and pump station cost and by the corresponding pipeline friction losses and pumping head.

A cost optimization exercise was undertaken to determine the most economical combination of pump station cost and pipeline cost. The cost optimization exercise was based on a two pump station configuration with uPVC as pipeline material. Economic models for a number of pipeline diameters and the corresponding pump station pumping heads were set up and compared with each other based on a net present value (NPV) basis.

Electrical supply

The electrical supply at the pump station is taken to form part of the WTW. No additional capacity is required.

5.4 APPROPRIATE WATER RESOURCE CHOICE & ADEQUATE WATER ALLOCATION

There are only two possible water resource choices, namely:

 Vaalharts Water Scheme

 Local groundwater

A major concern with the boreholes is that their sustainability cannot be guaranteed. The boreholes have a history of drying up during prolonged dry seasons. In addition, the Vaalharts Water Scheme has indicated on various occasions that they will supply the increased water demand.

The regional water supplier is the Vaalharts Water Scheme. An existing permit is in place to abstract 173 740 m³ per year. Vaalharts Water Scheme indicated that Dikgatlong Municipality can increase its permit to the volume required of the proposed upgrades. Dikgatlong Municipality will complete an application for the proposed increase of its abstraction permit and submit it to the relevant authority.

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A license application is being submitted to DWS. The application is to upgrade the permit to 496 400 m³ per year.

5.5 COMPLIANCE TO WATER DEMAND/WATER CONSERVATION OBJECTIVES

A WCDM strategy business plan has been done for the Dikgatlong Municipal area and submitted to the DWS Accelerated Community Infrastructure Programme (ACIP) for Regional Evaluation Committee for consideration132. The ACIP business plan includes the following:

 Water Conservation and Demand Management

 Bulk sewer Sanitation and Sanitation System

 Refurbishment of Delportshoop WWTW

 Water Conservation and War on Leaks

Windsorton per capita water use is excessive in comparison with benchmark levels based on the demographic profile for the town. This indicates that significant savings could be achieved through WC/WDM initiatives.

Part of the proposed new module at Windsorton WTW would be a new wash water recovery system for the whole works. It is estimated that up to 70 % of the water which is lost through back washing and draining of settling tanks, will be recovered.

5.6 OPTIMAL CHOICE OF BULK INFRASTRUCTURE

It is envisaged that the bulk supply line will be constructed in the road-reserve towards Holpan. There are shorter routes through privately owned mines, but this is not a suitable option. The land owners indicated that the relevant areas are going to be mined, which implies that the new pipeline will be damaged.

132 Mail from Obusitse Keitumetse dated 02 October 2014

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5.7 PROOF OF BEST SUITED TECHNOLOGY

The two existing water treatment modules at Windsorton are treating the water to an acceptable standard. It is proposed that the third module makes use of the same treatment technology as the first two modules.

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6 INSTITUTIONAL CRITERIA

The Council of Dikgatlong Municipality submitted a Council Resolution during 2009, indicating that the Municipality will act as Implementing Agent for the project, as well as takes ownership of the newly constructed infrastructure and will be responsible for the operation and maintenance thereof.

The Council does however had the opportunity to review the decisions taken during 2009 and resubmitted an updated Council Resolution.

A Desktop Analysis was done during 2012 in order to establish the Institutional Framework within which this project will be implemented, as well as the infrastructure (after construction) will be owned, managed, operated and maintained.

Information was mainly sourced from the Annual Report 2010/11 as well as the 2012/13 Report, the audited financial statements of 2010/11 and 2012/13, as well as the IDP of 2012/13 and 2014/15. During this Desktop Analysis, the various institutions which might probably play a future role, were identified and described. Thereafter, a high level assessment of the performance of the Municipality has been done and described. More detail regarding the latter is available in the Report: Holpan Bulk Water Supply - Towards the development of an Institutional Framework attached as Addendum G.

The Institutions identified as part of the Desktop Analysis, as well as the possible role which they can play in terms of this project, are summarised in the bullets below:

 In the context of developmental government, Dikgatlong Municipality will play a major role with regards to the execution of the project, as well as the management and operations thereof after the project is completed.

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 Frances Baard District Municipality is the Category C Municipality for the project area. The District Municipality and the Dikgatlong Municipality have a good working relationship. In the technical division of the District Municipality, technical staff members are allocated to the various Local municipalities to provide assistance. One of these Technicians is allocated to Dikgatlong Municipality. This Technician provides technical -, financial - and project management support to the Municipality. During discussions with Mr Desmond Makaleni, he indicated that the District Municipality is currently in the position to support the Municipality in the initiative which they embark on. He however does not foresee that the District Municipality will play a direct role in owning the infrastructure and or operating/maintaining the infrastructure. They will be able to assist the Municipality in drafting TORs for work to be done, compilation of O&M Manuals, training, project management support, etc.

 Discussions with the Vaalharts Water Users Association (VHWUA) indicated that they are not interested in fulfilling any other responsibilities with regards to water provision to Windsorton and/or Holpan. Mr Kobus Haarbron confirmed that the VHWUA is not in the position/has the necessary capacities to become involved in water treatment activities or operation and maintenance activities. The team does therefore not foresee that the VHWUA’s responsibilities will increase to fulfil additional function with regards to water provision. They will remain the bulk water supplier of raw water to Dikgatlong Municipality.

 As indicated in the above paragraph, the Lower Vaal Catchment Management Agency is still being managed by the Department of Water Affairs. They will therefore not be in the position to assist with management, ownership and operation and maintenance activities.

 Sedibeng Water is a Water Board operational in this area. They control, manage and operate the Vaal Gamagara Scheme, which is in close proximity of Barkley West. The main water purification works for this Scheme is located close to Delportshoop, which is within the jurisdiction area of the Municipality. Delportshoop is approximately 65km from Windsorton. This Water Treatment Work is owned by Sedibeng Water. Delportshoop therefore receives treated water from Sedibeng Water. The LM is however responsible for the rest of the water reticulation, as well as the operation and maintenance of the storage facilities. The possibility to approach Sedibeng Water to assist them with the operation and maintenance of the Water Treatment Works at Windsorton as the newly constructed infrastructure to Holpan can be

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considered by the Council of Dikgatlong. The team did not engage in any negations at this stage. Should the Municipality therefore decide to reconsider their decision of 2009 to fulfil all the responsibilities; they can approach Sedibeng Water to assist. This option can then be further investigated.

 Holpan community is part of a Community Property Association. Communal Property Associations (CPAs) are landholding institutions that were established under the Communal Property Associations Act No. 28 of 1996. CPAs were created for groups who needed to organise themselves as legal bodies in order to be able to receive title deeds to land under the restitution and redistribution programmes. The CPA will mainly be responsible to assist the municipality in cost recovery initiatives.

As can be seen in the above paragraphs, Dikgatlong Municipality, as the Water Services Authority and Provider in this area, will play the main role in terms of Implementing Agent, ownership of the infrastructure, as well as to manage, operate and maintain the proposed infrastructure.

6.1 INFRASTRUCTURE OWNERSHIP

Dikgatlong Municipality is the Water Service Authority for Windsorton and Holpan. There is no other Municipality or Water Services Institution which will benefit from this project. Dikgatlong Municipality also has provided an undertaking (Council Resolution: 2009/23/21 and Letter: Commitment to Ownership), to be the owners for the proposed Bulk Water Supply Scheme.

Based on the facts listed in the above paragraph, it is believed that Dikgatlong Municipality is the best positioned to take responsibility of ownership for the newly constructed infrastructure.

The Municipality will have to review and update their Asset Management Plan and Asset Register in order to incorporate the newly constructed infrastructure components.

6.2 AGREEMENTS ON INFRASTRUCTURE OWNERSHIP

The entire project area is within the jurisdiction area of the Dikgatlong Municipality. No other Municipality and/or Water Services Institution will benefit from this Scheme or components of the Scheme. At this stage, it is not envisaged that any agreement between the Municipality and any other party regarding this aspect needs to be concluded.

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6.3 AGREEMENT ON IMPLEMENTATION RESPONSIBILITY

The Municipality, who is the Water Services Authority for the area, will act as Implementing Agent for this project. No other suitable Water Services Institution to implement the project on behalf of the Municipality will be identified.

Dikgatlong Municipality is willing to conclude an Implementing Agent Agreement with DWS should it be requested. As soon as the project is approved by all relevant parties, the detail contractual arrangements can be negotiated and the Agreement can be signed.

DWS NC is aware of the challenges and constraints which the Municipality experience on a day to day basis. DWS do however belief that the Municipality will be in the position to implement this project with the support from the District Municipality, its professional team as well as the DWS Regional office.

6.4 CONFIDENCE IN THE CAPACITY OF THE INSTITUTION TO IMPLEMENT

Dikgatlong Municipality is responsible for the implementation of various capital projects and programmes funded by Government and other funding sources. In the paragraphs below, the performance of the Municipality in terms of these programmes is described.

It should be noted that approximately 2 years ago, the Municipality was basically insolvent and they did not comply with most of the performance indicators set by Government. They are currently on a road to improve service delivery, increase institutional compliance and planning, as well as fulfill the responsibilities which are assigned to them through legislation.

It is therefore believed that the Municipality, with the support from the District Municipality as well as the Professional team appointed as part of this project, will be in the position to manage and implement the project.

Support from Frances Baard District Municipality: One Technician from the District Municipality is allocated to support and assist Dikgatlong Municipality on a continuous basis. She provides support with regards to technical -, financial - and project management aspects and is available on a daily basis to assist the Municipality. She visits the Municipality on a regular basis in order to familiarise

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herself with the current situation at the Municipality and the challenges experienced. Should specific support be required in terms of the execution of this project, a Service Level Agreement can be signed between the Municipality and the District Municipality.

Support from the Professional Team: Dikgatlong Municipality has appointed professional service providers to render specific services regarding the implementation of the proposed bulk water supply scheme. The neccessay appointments were made to assist the municipality with the planning phase of this project. The municipality will again follow its procurement process to appoint service providers for the execution of the project.

An overview of Dikgatlong Municipality will be given in the paragraphs below. The purpose of the overview is to provide some background of the Municipality and its operations. The information will be used to provide a clear understanding under which conditions and structures the Municipality operates its water and sanitation services and the efficiency thereof.

Dikgatlong Municipality was established in 2001 in accordance with the demarcation process, with its name derived from a Setswana word meaning “confluence”. The word “confluence” is used as the Municipality refers to the place where the Harts - and Vaal Rivers flow into each other in Delportshoop. The municipal area consists of three towns, namely Barkly West, Delportshoop, Windsorton and the following rural areas:

 Holpan

 Longlands

 Gong-Gong

 Smithsmine

 Waldecks Plant Stilwater

 Pniel

 Sydney on Vaal

 Morrisdraai

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Ulco and Vaal Gamagara also fall within the Dikgatlong municipal area, but the Municipality does not deliver any services to these areas. Dikgatlong Municipality forms part of the Frances Baard District Municipality and is situated in the eastern area of the Northern Cape. The Municipality is located 30km West from Kimberley, with a geographical area of 2 377.5160 square kilometres.

The Local Municipality is a Category B Municipality, with a Plenary Executive System as contemplated in Section 3 (b) of the Determination of Types of Municipality Act, 2000 (Act No 1 of 2000). The Municipality has seven wards, of which ward five (5) is the largest in terms of geographical area and ward one (1), in terms of population size. The Municipality increased drastically in terms of geographic size with the incorporation of the District Municipal Area (Koopmansfontein, Blikfontein, Eierfontein, Klipfontein and Dancarl), after the 2011 Local Election.

The Municipal Manager is the Administrative Head of the Municipality and also the Accounting Officer in terms of the Municipal Finance Management Act (MFMA). The Municipal Manager is supported in the management and administration of the Municipality by the Departments:

 Corporate Services Department

 Financial Department

 Technical Department

The Political Leadership consists of thirteen Councillors with a full time Mayor/Speaker. Seven out of the thirteen are Ward Councillors and six Proportional Representatives.

To maintain a working relationship between the Administrative and the Political Structures, a Committee System (Administrative Committee, Financial Committee, Technical Committee and Transformation Committee) is in operation.

General Management refers to the Municipality’s overall capacity to plan strategically, set objectives, manage resources, deploy human and financial assets needed to achieve objectives, and to ultimately, measure results.

In the Annual Report for 2010/11, as well as the IDP for the 2012-2013, it was reported that an interim arrangement was put in place during 2010, which was aimed to recover the organisational and

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service delivery capacity within Dikgatlong Municipality and to revive the financial and operational viability of the Municipality.

The Municipal Manager, Technical Manager, and Chief Financial Officer were suspended on 07 April 2010. The positions of Municipal Manager and Technical Manager were occupied by two officials, seconded by the Department of Co-operative Governance & Traditional Affairs and a CFO was appointed on a contractual basis. The Corporate Services Manager’s position was left vacant.

On the 25th of January 2011, a new Organogram was adopted at a council meeting to improve service delivery and to achieve the objectives of Local Government, as enshrined in The Constitution “Chapter 7”.

A Municipal Manager was employed on a Section 56 Contract. The Technical Manager, Financial Manager and the Corporate Manager positions were advertised and appointments were made, except for the Corporate Manager’s position.

A new TURN AROUND PLAN was developed and adopted. The key focus areas of the Plan were based on three components i.e. (i) Institutional development and compliance, (ii) Financial viability and (iii) Service Delivery. A new Management Model was also adopted with focus on Performance, Targets and Compliance. A total of 7 middle-management managers and 34 additional operational staff members were appointed. Twelve new offices were established during the renovations of the main administration block and old Barkly-West Library. An extra total of 11 vehicles were acquired to complement the old fleet with improvement of service delivery. An outstanding amount of R1,5m was paid in full to the Office of the Auditor General; debt owed to Sedibeng Water was reduced from R8,6m to R5,8m and the target was set to settle the account in full by October 2012. Another long outstanding amount of R1m owed to Vaalharts Water was also paid in full. The Municipality is currently operating without an overdraft. The main priorities identified for the coming financial years are:

 To improve service delivery

 To increase local economic development and opportunities

 To implement capital projects

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 To increase payment levels

 To reduce and contain cost

 To improve the supply chain process

 To improve staff discipline and morale

It is clear that the Municipality has put in a tremendous effort to improve their performance regarding their role as stipulated in National Legislation.

In the paragraphs below, the status according to key performance areas are described. These are 1) Infrastructure, 2) Human Resources and Human Capital, 3) Financial Management, 4) Legislation, Policies, Bylaws, Contracts and Regulations, 5) Planning.

Infrastructure

Overall, it is believed that the Municipality has sufficient resources e.g. computers, filing cabinets, etc., in place to help ensure effective management and administration of municipal affairs.

There is a Municipal Office in each of the main towns, which are also equipped with the basic infrastructure. A telephone system was installed to improve connectivity between all work places.

In recent years, the Council Chambers and Main Offices were upgraded to provide additional office space. New computers were purchased and all essential staff was provided with email and internet facilities. Fax and printer facilities were also upgraded.

Human Resources and Human Capital

The Municipality has an approved Organizational Structure which is being reviewed on an annual basis and submitted to Council, with the budget for the following financial year. In the Annual Report of the Municipality, it is mentioned that most of the critical posts are currently filled. It is however noted that the post for the Manager Corporate Services is vacant. The Municipality attempts to recruit people on an ongoing basis.

During 2013, the Municipality reported that only 194 posts out of the 228 posts are filled. Approximately 15% of all the posts were therefore still vacant. There are 5 posts vacant within the

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middle management post level, whilst only 1 in the admin officer level and 28 in the general worker level.

The Municipality indicated in their Annual Report 2012/13 that the Performance Management System is in the process of being implemented on senior manager’s level only. There is still a need for more awareness/consultation before the system will be implemented on all job levels.

Financial Viability

It is stated that the financial viability of the municipality is constantly under threat. This is mainly due to limited resources as well as the poor payment culture. The Municipality indicated that they have embarked on implementing a range of revenue collection strategies to optimize the collection of debt owed by consumers.

In the “General Report on the Audit Outcomes of the Northern Cape Local Government 2012/13” the Auditor-General withheld an opinion and issued a disclaimer. This situation remained the same for the past 4 years.

Audit outcomes Audit outcomes Audit outcomes Number Municipality 2012-13 2011-12 2010-11 Audit outcomes 2009-2010

8 Dikgatlong Disclaimer Disclaimer Disclaimer Disclaimer

Policies and Bylaws

In order to perform the function of a Water Services Authority and Water Services Provider, the Municipality must have specific Policies and By-laws in place which regulate service delivery.

By-laws set out the relationship between the Municipality, its Service Providers and Consumers. By- laws should provide clarity in respect of the rights and responsibilities of the Municipality, its Service Providers and Consumers. By-laws are, as stated above, the legislative instruments through which Municipalities give effect to their Policies and are critical instruments in ensuring the Municipality’s sustainability.

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The Municipality has adopted the standard By-Laws as published by DPLG in the Provincial Gazette No. 982 of 6 May 2005 by General Notice No. 54. These By-Laws will be amended to be in line with local circumstances.

A list of the by-laws to be amended and adopted by council is as follows:-

 Law Enforcement

 Cemeteries

 Keeping of Dogs Control

 Keeping of Animals, Poultry and Bees Control

 Street Trading Control

 Advertising Signs, etc.

 Building Regulations

 Tariffs

 Credit Control and Debt Collection

 Standing Orders

 Commonage Land

 Land Disposal Policy

 Residential Business

 Municipal Health Nuisances

 Health Nuisances arising from the keeping of animals

 Animal establishments

 Child care facilities

 Swimming pools and water related recreational facilities

 Barbers, hairdressers, beauticians, body piercers or tatooists

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 Waste management (available in draft format from FBDM)

 Water and sanitation (available in draft format from FBDM)

 Disposal of corpses and disturbance of mortal remains

 Dry-cleaning and laundry businesses and depots

 Enforcement

 Miscellaneous provisions

No information could be obtained regarding the status of Contracts between the LM and Sedibeng Water, Vaalharts Water Users Association, as well as relevant Water Use licenses which should be in place with Department of Water and Sanitation. The Municipality is also now in the process to sign a Service Level Agreement with the various CPAs in the area.

Planning

The Municipality regards the IDP as a strategic planning instrument which guides and informs all planning, budgeting, management and decision making in the Municipality. The objectives and purpose of the IDP are:

 Provision of sustainable services;

 Promotion of social and economic development;

 Promotion of a safe and healthy environment;

 Priority to basic needs of communities;

 Encouragement of involvement of and participation of communities.

The IDP approach needs to focus on consultative, participatory, analytical, strategic and objective oriented event centered process for decision making on issues related to municipal development.

The process followed when reviewing the IDP is similar to the one adopted during the IDP preparation process. Similar structures used in the IDP preparation process are used in the IDP-Review process; these are the IDP-Representative Forum and the IDP-Steering Committee.

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Each Head of Department in consultation with the Municipal Manager and IDP Officer identify projects. These projects are discussed in the Budget Steering Committee meeting and a preliminary budget is allocated to each identified project. A draft budget is presented to the community after adoption by Council and later advertised for comments in the newspaper. After the advertisement period the budget is presented to Council for approval and adoption.

6.5 PROOF OF IMPLEMENTATION CAPACITY

The Municipality indicated in their Annual Report that service delivery in the area is mainly hampered due to the lack of adequate funding, poor financial position of the LM and the chronic shortage of staff.

According to the DWS Geodatabase system, 210 households on formal stands and 1,481 households on informal stands in the Dikgatlong municipal area, do not have access to an adequate level of water supply. In terms of sanitation services, there are still adequate services needed at 144 households on formal stands and 3,055 households on informal stands.

Holpan did not record any households with a water and/or sanitation supply that was below basic. Windsorton on the other hand had 1083 households with a water and/or sanitation supply below basic contributing to the majority of those without a basic supply in Dikgatlong Municipality.

The Municipality is actively involved in the MIG Programme and a number of projects have been implemented as part of this Programme. The Municipality does however struggle to spend the allocation, as well as to do the necessary reporting. The following information was received from the MIG Office (End September 2014 status):

 2012/13: Spent 100% of R25.6 million

 2013/14: Spent 84% of R34.7 million

 2014/15: Spent 21% of R20.0 million

The Bucket Eradication funding allocated to Dikgatlong Municipality in 2007/8 was successfully implemented and completed with various stakeholder involvements.

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The Municipality acted as Implementing Agent on a number of projects funded by DWS (Masibambane Programme). The main Programme was the Institutional Support Programme during which the Municipality received approx. R2.7 million between 2003 - 2010. The aim of this Programme was to support Municipalities to fulfill their role as WSA and WSP.

As part of the Drought Relief Programme, the Municipality received R1,894,000 as part of Allocation 1 and 3. Both these allocations were utilized on groundwater development in the Municipal area.

The team could not get hold of any approved Water Conservation and Demand Management Strategy for Dikgatlong Municipality.

In the Annual Reports, the Municipality also reported progress (physical and financial) on projects such as managing the electricity demand, maintaining roads and feasibility studies conducted. According to this Report, it seems as if the Municipality is reaching some of the targets set by them. The Municipality indicates that service delivery is still one of the Key Performance Areas that requires intensive focus and management support to improve the capabilities. Although some of the impeding factors have been addressed, there is still a long way ahead to improve service delivery and instill a culture of customer orientation and service excellence.

The upgrade and maintenance of the municipal infrastructure and assets remains a priority not only to preserve assets but also to optimize services delivery. Success was achieved by the implementation of Operation and Maintenance projects. The Frances Baard District Municipality mainly handled the procurement and payment procedures of these projects.

According to the Blue Drop Report 2012, Dikgatlong Municipality was ranked the 15th position on the Provincial log. Their Blue Drop score weakened since 2010 when they obtained an average of 83.30% to a score of 55.32% during 2012. This year (2012) was also the first year during which the Windsorton plant was assessed. It scored 55.09% with a Microbiological compliance of 95.7% and Chemical compliance of 99.9%.

It should further be noted that a Call Centre is in operation at the Technical Department. All consumer calls are recorded and work teams are dispatch from there. Job cards are raised and supervisors monitor if the work was done. During the 2011/12 reporting period, a total of 5,964 calls were logged

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of which 1,098 calls were related to water. This represents 18.4% of all the calls received (second highest categorization of calls). Most of the calls, 63% is related to sanitation.

The Regulatory Performance Measurement System is a web-based system that measures WSA’s against 11 Key Performance Indicators derived from the Strategic Framework for Water Services and from the National Water Services Regulatory Strategy. According to this System, Dikgatlong Municipality performed unsatisfactorily on institutional effectiveness, financial performance, strategic asset management and water use efficiency. The municipality however scored very high for Customer Service Quality.

The LG Turnaround Strategy categorized all the Municipalities into classes of vulnerability. The indicators used for this categorization are spatial, social, municipal capacity and economic. Dikgatlong Municipality falls within the high vulnerability class.

According to the Consolidated Report on the Performance of NC Municipality 2008/09, Dikgatlong Municipality was ranked the 4th lowest scorer and during 2007/08, the 13rd lowest. These rankings are done according to 6 KPIs (access to services, FBW, spending of MIG allocations, AG opinion, number of debtor days, cost of employees and councilors as a percentage of total operating expenditure.

6.6 OPERATIONAL AND MAINTENANCE RESPONSIBILITY

Effective operation and maintenance of municipal infrastructure and assets remains a priority for Dikgatlong Municipality. The management of the Municipality beliefs that it does not only preserve assets, but is also optimize service delivery. The Municipality therefore took the decision to take responsibility for this function. The current reality is that capacity and skills constraints exist within the Municipality and this needs to be addressed as a matter of urgency. It is however the wish of the Municipality to rather build its internal capacity to perform this work, than to approach another Water Services Institution to assist them in this regards. This is also captured in the Turn Around Strategy of the Municipality.

As indicated in Paragraph 6, the Institutions which are in the vicinity to assist the Municipality are currently not in the position to assist with hands-on operation and maintenance activities.

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Frances Baard District Municipality: Mr Desmond Makaleni, Technical Manager, indicated that they are not in the position to take over the function from the Municipality. They will however support the Municipality through the Technician which is allocated to Dikgatlong Municipality. Their support will focus more on providing general support with regards to the drafting of O&M Manuals, O&M Schedules, etc.

Vaalharts Water Users Association: Mr Kobus Haarbron confirmed that the WUA is not in the position/has the necessary capacities to become involved in water treatment activities or operation and maintenance activities.

Sedibeng Water is a Water Board operational in this area. The possibility to approach Sedibeng Water to assist them with the operation and maintenance of the Water Treatment Works at Windsorton as the newly constructed infrastructure to Holpan, can be considered by the Council of Dikgatlong. The team did not engage in any negations at this stage. Should the municipality therefore decide to reconsider their decision of 2009 to fulfil all the responsibilities; they can approach Sedibeng Water to assist. This option can then be further investigated.

There are no other Private institutions which can be approached to assist with this function.

Dikgatlong Municipality has provided an Undertaking (Council Resolution: 2009/23/21 and Letter: (Commitment of Ownership – Annexure H) that they will be responsible to operate and maintain the proposed Bulk Water Supply Scheme.

In the said letter, Dikgatlong Municipality also undertakes to make provision to budget for the operational and maintenance cost for the proposed Bulk Water Supply Scheme.

With the support from the appointed Engineer, the Municipality must ensure that a 12-month defects liability period forms part of the tender documentation of the contractor, as well as in the agreements signed with the Contractor. The appointed Engineer must ensure that the various contractors submit O&M Manuals for the specific components they are involved in. The appointed Engineer must thereafter compile an easy to understand, site specific, O&M Manual regarding the general operation and maintenance of the Plant. This Manual should contain structural, mechanical, electrical detail of the Plant, design specifications of Plant, reference to drawings, operational schedules, maintenance schedules, process detail and control, instrumentation specification/type, fault finding, monitoring,

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pump curves and supportive appendices (if needed). The Operators should be trained to use the Manual and copies of the Manual should be available on site. It is recommended that the Technician from the District Municipality forms part of the compilation of the Manual, as well as the training. This person will then be in the position to provide hands-on support to the Operators after the project is handed over to the Municipality.

As part of this process, an Operational Logbook should also be developed to record all incidents at the water treatment works, as well as to capture operational monitoring results.

If the Turnaround Strategy from the LM to increase internal capacity does not succeed, the Municipality will consider appointing a supplier/suppliers on a fix term contract to assist with scheduled, as well as emergency maintenance of assets.

6.7 ROOF OF ADEQUATE STAFF NUMBERS AND SKILLS LEVELS

In Dikgatlong the water services are managed and maintained by the Technical Service Department.

The existing WTW in Windsorton is operated by four trained personnel from Dikgatlong Municipality. The Operators are available 24 hours a day. All the Operators have received training form DWA. The Dikgatlong Municipality is however aware of the fact that, as with most Municipalities, there is a shortage of labour and appropriate skill levels.

The Plant is currently classified as a Class D Works. After the newly constructed infrastructure is handed over to the Municipality, it will most probably be classified as a Class C Works. The minimum class of process controller required per shift is a Class II operator and for supervision a Class III Operator. For O&M support, an Electrician, Fitter and Instrumentation Technician must be available at all times, but may be in-house or outsourced.

As part of the Turnaround Strategy of the LM, they will appoint 4 Operators to assist with water related aspects. In most cases, the Northern Cape and especially small towns such as Barkly West/Windsorton will struggle to appoint Process Controllers with the required classification. As soon as the appointments have been made, the Municipality, together with the District Municipality, should develop a Training/Skills Improvement Plan for each individual Process Controller in order to ensure

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that they can reach the required classification within a specific timeframe which is possible for the individual, as well as within budget for the Municipality.

6.8 HISTORY ON WATER SERVICES INTERRUPTIONS

The Municipality reported in the WSDP signed-off during February 2012, that no data is available regarding water services interruptions. They do not have any records of water services interruptions over the past 2-3 years. In general, the Municipality does not experience any significant service interruptions. Local pipe leaks are mostly repaired as a matter of urgency and have little or no effect on the service delivery and water availability.

6.9 COOPERATION AGREEMENT BETWEEN KEY STAKEHOLDERS

Public Participation Forms an integral part of the Municipality’s approach when developing and updating the IDP for a financial year. Specific structures have been established to ensure that all stakeholders in the municipal jurisdiction area are informed about the IDP review and have the opportunity to give their input in terms of status quo information, projects and delivery targets. These Forums include structures such as the IDP-Representative Forum and the IDP-Steering Committee. Community sessions are also conducted in the various settlements/wards in order to ensure that community members are involved in the compilation process. Through these processes all the stakeholders have agreed that this is a priority project and that funding needs to be secured.

The Vaalharts Water Users Association is a major role-player with regards to this project, since they are the Bulk Water Services Provider for Windsorton. There is currently a permit in place to abstract a certain volume of water per year. This Permit will have to be reviewed to increase the abstraction volume and the necessary contractual arrangements must be put in place. The details of these arrangements are usually captured within the approved Water Use Licence and no additional Contract is required.

As indicated, the Municipality will be the owner of the infrastructure and no additional contracts have to be signed regarding these arrangements. Dikgatlong Municipality will also take on the responsibility of Implementing Agent. No Contract with other Water Services Institutions regarding

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these responsibilities is necessary. The Municipality did however indicate that they are willing to sign a Contract with DWA should the latter require it.

6.10 WATER CONSERVATION AND DEMAND MANAGEMENT PERFORMANCE

A Water Conservation and Demand Management Plan was developed during 2011 and is currently being used as a strategic document for at least the next five years, where after it must be updated. The Municipality does not perform a water balance on a regular basis. The Municipality has also installed bulk meters in Barkley West, Delportshoop and Windsorton at strategic position as a first step to enable them to do a water balance. Other actions taken by the Municipality are as follows:

 Repairing leaks inside the houses of indigent consumers.

 Special metering for indigent consumers to ensure adherence to 6Kℓ free basic water.

 Increasing of isolation valve on our internal water network to reduce our water losses due to leakages.

 Install bulk meters at reservoirs, boreholes and other sources to increase monitoring of water losses.

 Awareness campaigns on speedy reporting of leakages by general community.

All of the above are on-going in an attempt to salvage some of the occurring water loses. However, a lack of funding hampers the implementation of the costly items.

6.11 COMMITMENTS BY INSTITUTIONAL LEADERSHIP

Dikgatlong Municipality is the only benefitting Municipality and therefore only their Council needs to indicate the following:

 They support the funding application

 They agree with the proposed solutions and scheme components

 They agree with the information contained in the IRS Report

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 Should the RBIG funds be made available, they agree to co-fund the proposed project in accordance with the social/economic split determined

 They agree to RBIG Funding Conditions.

6.12 APPROVAL OF INSTITUTIONAL ARRANGEMENTS

It is stated in the RBIG TOR: Feasibility Study and Implementation Ready Study Guideline that if the benefitting institution will not be the owner or be responsible for the operation of the infrastructure, approval of the institutional arrangements must be obtained from both Co-operative Governance and Traditional Affairs and DWA.

As indicated in above paragraphs, Dikgatlong Municipality is the only benefitting Institution. They have agreed to take ownership of the newly constructed infrastructure, as well as manage, operate and maintain the infrastructure. No additional approvals are therefore needed for the appointment of other Water Services Institutions to perform this function.

It should however be noted that this project are discussed during the RBIG Adjudication meetings which are taking place on a quarterly basis. At these meetings, DWA is chairing the session and invites sector partners to comment on the proposed projects. The Department of Co-operative Governance, Human Settlements and Traditional Affairs is part of this Committee and therefore has the opportunity to provide comments on any aspect regarding the proposed project, which includes the Institutional framework within which the project will be implemented. This Department has not communicated any concerns regarding the proposed institutional framework for this project. A representative of the Rapid Response Unit is also invited to this meeting and all planning documents are circulated to him to obtain his view and technical review on the proposed projects.

Other institutions which are also invited to these meeting are:

 Various divisions in DWA which includes National Water Resource Planning, National Planning, and Information and National RBIG, as well as representatives from the Regional Office Water Sector Support and Water Use and Regulation divisions

 SALGA

 ESKOM

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 Provincial Treasury

6.13 COST RECOVERY SYSTEM

The municipality is currently rendering services to the Holpan community. No cost recovery is taking place at this stage. The municipality is in the process to negotiate a Service level agreement with the CPA.

6.14 RESPONSIBILITY AND ACCOUNTABILITY

Since this project is regarded as a priority project within the Municipality, there will be a team of people working on this project to ensure the successful implementation thereof. The following people are assigned to the following categories of responsibilities:

Responsibility Division Person

Project management during Implementation Technical division Technical manager

Supply chain Supply chain Procurement process during Implementation management unit management officer Financial management and accountability of Financial division Chief financial officer project funds Operation and maintenance responsibilities of Technical division Technical manager proposed project Municipal manager’s Legal agreements Municipal manager office

Planning of water services and the proposed scheme

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7 FINANCIAL CRITERIA

7.1 AVAILABLE FUNDING

It is envisaged that the entire project will be funded through grants. DWS Regional Infrastructure Grant (RBIG) indicated that they will fund the social component as well as the part enabling the economic environment. The funding required to supplement the RBIG funds is not finalised and the Dikgatlong Municipality has to agree on the method of co-funding.

7.1.1 DWS Regional Bulk Infrastructure Grant

DWS made available R 5 million in grant funding for the project to be implemented. This budget allocation is however subject to the Dikgatlong Municipality being implementation ready according to the DWS Regional Bulk Infrastructure Grant Policy/Guidelines.

The social component is 72.94%, thus R 31 984 641.00 is to be funded from RBIG while the remaining R 11 865 977.00 has to be counter funded (all amounts VAT included).

7.1.2 Counter Funding

Dikgatlong Municipality has undertaken as to counter fund the project. However, no counter funding agreement is currently finalized.

7.2 FUNDING CONDITIONS

Only the social component for the grant can be funded in terms of the Regional Bulk Infrastructure Grant Policy/Guidelines as set out in its policy document. With reference to the non-grant funding, it is assumed private financing conditions are to be met. Each finance institution has its own unique criteria involving a list of rigid requirements ranging from surety to an allocated percentage of loans for deposit. In each case, clearly marked viability studies and projections have to be presented to ensure affordability and cash flow repayments of instalments. Amortisation schedules indicating the assumptions of both period and interest rates are key conditions for funding requirements as well.

Since no counter funding agreements are in place, it is assumed that a typical loan will be obtained from a financial institution and that the funds have to be reimbursed through the retailing of the water.

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8 LEGAL CRITERIA

8.1 APPROVED WATER LICENSE

The National Water Act (Act No. 36 of 1998) is founded on the principle that National Government has overall responsibility for and authority over water resource management, including the equitable allocation and beneficial use of water in the public interest. A person can only be entitled to use water if the use is permissible under the Act. Chapter 4 of the Act is therefore of central significance, as it lays the basis for regulating water use. DWS indicated that a General Authorisation (GA) is required for the following133:

 9 Mℓ raw water storage facility – earth wall lined with PVC

 1 Mℓ concrete potable water reservoir

 Sludge recovery dams 3 – 5 Mℓ, PVC lined

The regional water supplier is the Vaalharts Water Scheme. An existing permit is in place to abstract 173 740 m³ per year (Annexure K). Vaalharts Water Scheme indicated that Dikgatlong Municipality can increase its permit to the required volume of the proposed upgrades.

The report indicates that the quantity of water which will be applied for in the water abstraction permit is 496 400m³. An abstraction application is in the process of being submitted to DWS.

General Authorisation

8.2 ENVIRONMENTAL AUTHORIZATION FOR CONSTRUCTION OF SCHEME

The activities in the proposed scope of works do not constitute a listed activity in terms of Government Notice No R386. As such, a written authorisation is not required from the DENC. Refer to letter from the Department attached as Annexure I.

133 Email - Philani Msimango – Dated 02 October 2014

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8.3 LAND AND PROPERTY RIGHTS

Permission has been obtained from the Department of Transport, Roads and Public Works to cross road R347 and construct a rising main pipe line inside the road reserve (refer to Annexure J). The WTW is the property of the Dikgatlong Municipality and therefore no property rights issues is anticipated.

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9 SUSTAINABILITY CRITERIA

9.1 FINANCIAL VIABILITY

9.1.1 Financial

DWS has already allocated proportional grant funding for the implementation of this project for the financial year 2015/16 of R 16,500,000.00134 and Dikgatlong LM will discuss options regarding additional funding with different funding institutions after approval of RBIG funding by DWS.

The overall project cost is R 43 850 618.00 (VAT included). See Technical Feasibility Study attached as Annexure F for detailed/itemised cost breakdown of project cost including operation and maintenance costs.

The DWS RBIG contribution is applicable to the social component of a Municipality. Dikgatlong Municipality is proposing a social component of 72.94% to DWS. On the total scheme implementation cost it implies that DWS will contribute an amount of R 31 984 641.05 (including VAT) and Dikgatlong LM will need to obtain funding for the remainder of R 11 865 977.33 (including VAT).

9.1.2 Economic

Further economic growth and development within the municipality is dependent on the successful implementation of the project. Agriculture and mining are two keys sectors that can significantly benefit and create numerous job opportunities. From the project itself, the new pipeline and water treatment works is expected to stimulate significant economic activity within the regional economy. The Dikgatlong Municipality is experiencing low levels of labour force participation and employment. The scale of the project poses opportunities for low and semi-skilled labour. This should have a number of positive economic spin offs in the area such as an increased buying power of the local communities. This should create the platform for new small business establishments, which in turn will also create more jobs.

134 RBIG Capital grants on implemented projects. Email received from Mr K Streuders on 27 March 2013.

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Worth mentioning, while providing water does not necessarily directly result in large tangible economic growth immediately, the lack of quality water certainly does inhibit growth.

9.2 OPERATING AND MANAGEMENT CAPACITY, PERFORMANCE AND COMMITMENT

Dikgatlong Municipality is currently operating and maintaining the Windsorton WTW. The same operational and maintenance team will be used for the upgraded WTW. The Municipality is also committed to make provision for the operational and maintenance responsibility for the proposed upgrading of the WTW as indicated in the Council Resolution and letter from the Municipality (Annexure H).

9.3 ENVIRONMENTAL AND SOCIAL ACCEPTABILITY AND IMPACT

The community was informed about the proposed bulk supply scheme through the IDP process.

The aim of the project is to increase the capacity of the WTW to ensure that the quality of the water complies with DWS’s requirements in terms of the National Water Act. This will ensure that the environment and the health of the community are not compromised. This objective will be achieved through the utilization of the existing infrastructure and implementation of the most suited technology in order to limit the ecological footprint of the project.

As stated previously, the main drivers for this project are:

 Providing basic services to the community

 Support economic growth and development

 Address water scarcity and drought

 New infrastructure to improve the water service quality

The proposed activities in the scope of works do not constitute a listed activity in terms of Government Notice No R386 and therefore no significant environmental and/or social impact is expected.

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10 CONCLUSION

The primary objective of this report is to illustrate how the proposed upgrading of the Windsorton WTW meets the prescribed requirements to qualify for RBIG funding. The Dikgatlong Municipality is applying for RBIG funding to co-fund the capital cost associated to the project.

The estimated total cost of the project is R 43 850 618.38 (including VAT). The cost per capita, based on the estimated future population of 8 501, is R 5 158.30 (VAT included) per person and the unit cost of the potable water is R 7.00 kℓ, which compares favourably with industry guidelines.

Based on the norms, number of indigents, associated users and enabling economic environment the social component of the project was calculated as 72.94%. The social component of the project is thus calculated as R 31 984 641.05 (including VAT). An amount of R 16 500 000.00 was approved for the 2015/2016 financial year by DWS and it is expected that the deficit will be funded by DWS in the following financial year. The Municipality will provide the balance of the project funds. The funding agreement will be finalized once DWS has confirmed their contribution to the project through the RBIG program.

The proposed activities in the scope of works do not constitute a listed activity in terms of Government Notice No R386 and therefore no environmental authorization is required.

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Annexure A. Dikgatlong Municipality. Final IDP document 2012-2013

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Annexure B. Windsorton & Holpan Social And Economic Criteria Report of The Implementation Ready Study

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Annexure C. Dikgatlong Water Services Development Plan

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Annexure D. Reconciliation Strategy for Windsorton Town in Dikgatlong Local Municipality in the Lower Vaal WMA

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Annexure E. Dikgatlong Municipality Blue Drop Assessment Report

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Annexure F. Windsorton/Holpan Regional Bulk Water Supply Scheme – Technical Feasibility Report

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Annexure G. Holpan Bulk Water Supply - Towards the development of an Institutional Framework

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Annexure H. Council Resolution regarding the Ownership and O&M of Scheme

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Annexure I. Environmental Approval

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Annexure J. Permission to cross Road R347

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Annexure K. Vaalharts Water User Associations Permit

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