Mamusa Bulk Water Supply Scheme

DR RUTH SEGOMOTSI MOMPATI DISTRICT MUNICIPALITY

Implementation Readiness Report

December 2013

IRS REPORT

Document Number 231080YNB/

COMPILED FOR: COMPILED BY:

Dr Ruth Segomotsi Mompati District Municipality WorleyParsons RSA (Pty) Ltd P.O. Box 21 Contact person: E Deysel VRYBURG 4 Sidney Street Kimberley 8600 PO Box 398, Bellville 7535 South Africa Tel No : +27 (0) 53 927 1095 Fax No: +27 (0) 53 927 2497 Telephone: +27 (0)21 912 3000 Facsimile: +27 (0)21 912 3222 email: [email protected]

DR RUTH SEGOMOTSI MOMPATI DISTRICT MUNICIPALITY

Disclaimer

This report has been prepared on behalf of and for the exclusive use of Dr. Ruth Segomotsi Mompati District Municipality, and is subject to and issued in accordance with the agreement between Dr. Ruth Segomotsi Mompati District 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 Dr. Ruth Segomotsi Mompati District Municipality and WorleyParsons RSA is not permitted.

PROJECT 231080YNB - IMPLEMENTATION READINESS REPORT FOR DEPARTMENT OF WATER AFFAIRS

WORLEY- CLIENT REV DESCRIPTION ORIG REVIEW PARSONS DATE DATE APPROVAL APPROVAL Issued for internal review E Deysel N/A 2013-12-13 N/A

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DR RUTH SEGOMOTSI MOMPATI DISTRICT MUNICIPALITY

REGIONAL BULK INFRASTRUCTURE GRANT - IMPLEMENTATION READINESS REPORT

EXECUTIVE SUMMARY

The study concerns the towns of Bloemhof and Schweizer-Reneke, which are to benefit from the proposed scheme. These towns are situated within the Lekwa-Teemane and Mamusa Municipalities respectively, which are both within the Dr Ruth Segomotsi Mompati District Municipality (DRSMDM) of the North West Province. Schweizer-Reneke‟s population growth and the shortage of water drives this project, thus alternative sources of bulk water supply were sought. The smaller towns of the Mamusa Municipality, namely Amalia, Migdol and Glaudina, have sufficient local groundwater resources to meet the current demands. Bloemhof is also encountering water shortages due to the insufficient capacity and decline of infrastructure, which attributes to the increasing water demand.

The primary objective of this report is to illustrate how the proposed Mamusa Bulk Water Scheme meets the prescribed requirements to qualify for RBIG funding. The Dr Ruth Segomotsi Mompati District Municipality is applying for RBIG funding to counter fund the capital cost associated to the project.

Schweizer-Reneke was founded in 1888. The town is situated in the Harts River valley on the R34 between Bloemhof and Vryburg. Bloemhof is situated on the Vaal River, roughly 50 kilometres between Christiana and Wolmaransstad, and it was established in March 1866. Both towns‟ economies revolves around agriculture, agriculture related industries and diamond mining.

The population of Schweizer-Reneke and Ipelegeng is projected to increase from 64 261 persons in 2010 to 86 391 persons in 2030 or a 35% increase. This brings about an increase in the Average Annual Daily Demand (AADD) of 2 304 mᵌ/d with a total AADD in 2030 of 9 373.2 mᵌ/d.

The demand is currently met by two water sources, i.e. the Wentzel Dam as primary supply and the Townlands Borehole Scheme as supplementary source in dry periods.

The Wentzel Dam is situated in the Harts River and has a full supply capacity of 6.203 million mᵌ. The 1:100 year stochastic firm yield of the source, with no ecological water release, is calculated at 1.08 million mᵌ. This is the amount of water available for primary water use.

The Townlands Borehole Scheme consists of 15 boreholes with a sustainable yield of 1 786 mᵌ/d. These boreholes can only be used when the water level in the Wentzel Dam drops below 4.82 m during the period 1 January to 30 September or below 4.56 m during the period 1 October to 31 December of any year.

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Bloemhof's water is abstracted from the Vaal River at the weir near the Bloemhof Dam where the existing abstraction works is situated. Water is conveyed to the existing water treatment works (WTW) in Bloemhof. The existing facilities were commissioned in 1992 and designed for a capacity of 9 600 mᵌ/d serving the projected 2008 population. The abstraction works have abstraction difficulties during drought periods and flood occurrences due to its design. However, the abstraction works at the weir and the WTW are running at full capacity and hence the capacity of these works need to be increased.

The current abstraction volumes are approximately 3.3 million mᵌ/annum and the estimated 2030 water demand is 5.37 million mᵌ/annum. The current registered volume is 1.6 million mᵌ/annum, thus application is to be made to DWA for a further allocation volume of 3.77 million mᵌ/annum. The application process is underway.

Several options were investigated during the feasibility phase of the project. The preferred and approved option is to provide purified water from the Bloemhof water treatment works (WTW) abstracting water from the weir in the Vaal River near the Bloemhof Dam. This implies that the following infrastructure and facilities be established and/or upgraded:

 Increase the existing capacity of the abstraction works in Bloemhof by either upgrading the current facility or relocating the facility to the Bloemhof Dam wall

 Increase the capacity of the WTW in Bloemhof to meet the projected water demand of the area

 Establish a bulk water supply pipeline between Bloemhof WTW and the Schweizer-Reneke bulk storage facility

The intention of the project is to provide basic services to the community, supporting economic growth and developments in the area.

The overall project cost is at R 429 440 739.58 (VAT and escalation included). Based on the norms, number of indigents, associated users and enabling economic environment the social component of the project was calculated at 50.5%. The social component of the project amounts to R 216 867 573 (including VAT). An amount of R 16.65 million was approved for the 2013/2014 financial year by DWA and it is expected that the deficit will be funded by DWA in the following financial year. The DRSMDM

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DR RUTH SEGOMOTSI MOMPATI DISTRICT MUNICIPALITY REGIONAL BULK INFRASTRUCTURE GRANT - IMPLEMENTATION READINESS REPORT

in conjunction with CoGTA will motivate to National Treasury a request for exemption on the issue of counter funding of R 212 573 166.09 (including VAT) due to:

The project is seen as a critical service by the Dr Ruth Segomotsi Mompati District Municipality as it will stimulate economic growth. The current demand of both towns exceeds the capacity of the infrastructure and no further development can take place without the upgrading of the infrastructure. The project is also in line with the strategic planning documentation including the WSDP, and IDP.

The current abstraction volumes are approximately 3.3 million m3/annum, while the estimated 2030 water demand is 5.37 million m3/annum. The current registered volume is 1.6 million m3/annum thus application is to be made to DWA for a further allocation volume of 3.77 Mm3/annum. The application was submitted to DWA and awaits approval.

The dBAR is in the process of being updated and the expected submission date of the Final BAR to the Department Economic Development, Environment, Conservation and Tourism – North West Provincial Government is January 2014. The submission is being delayed till January 2014 since the DEDECT requested that the public participation be reviewed because of the time elapsed since the first submission. The dBAR can only be submitted with the inclusion of the reviewed public participation process.

The Dr Ruth Segomotsi Mompati District Municipality will be the owner of the infrastructure and it is proposed that the operation and maintenance be conducted by the Lekwa-Teemane Municipality for the abstraction works and water treatment works initially. Once the total scheme is completed, negotiations between both Municipalities and Sedibeng Water can commence regarding the overall O&M.

Three landowners were consulted for available land for the construction of a booster pump station and elevated tank, the repeater signal station and a second elevated tank. The negotiation process with the landowners is well underway. As soon as an agreement is reach with the landowners, the legal documentation will be drafted and registration of the servitudes will be done according to the National Water Act (NWA) Act 36 of 1998.

The existing and proposed extension of the WTW will be located within the existing site boundaries and therefore no land ownership or other legal issues need to be resolved. However, the electricity supply will have to be upgraded. The process is underway with Eskom and Lekwa-Teemane Municipality.

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The Lekwa-Teemane Local Municipality has recently sold Portion 12 and the Remainder of the farm Klipfontein No. 344_Ho, the land on which the existing abstraction pump station is situated. A servitude in favour of the Local Municipality has been registered to accommodate the footprint of the existing pump station. This servitude will need to be increased to cater for both the increased size of the pump station and the existing and new proposed pipeline.

Electricity is required at the booster pump station and the second elevated tower along the pipeline route. Discussions with Eskom were positive and the application was submitted to Eskom‟s Senior Advisor.

The pipeline will be constructed within the road reserve as was approved by the Department Transport, Roads & Community Safety, North West Provincial Government.

The intent of all involved parties is to provide a cost effective solution in terms of construction as well as operating costs. Therefore the proposed technical design is the best suited to delivering potable water complying with DWA requirements whilst utilizing existing infrastructure and incorporating the client‟s operational and maintenance requirements.

Following the completion of this study, it is proposed that the “Mamusa Bulk Water Supply Scheme” project is implementation ready and that it qualifies for RBIG funding in terms of DWA 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 DRSMDM Dr Ruth Segomotsi Mompati District Municipality DWA Department of Water Affairs 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 WDM Water 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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DR RUTH SEGOMOTSI MOMPATI DISTRICT MUNICIPALITY REGIONAL BULK INFRASTRUCTURE GRANT - IMPLEMENTATION READINESS REPORT

CONTENTS

MAMUSA BULK WATER SUPPLY SCHEME ...... I 1 INTRODUCTION...... 1 1.1 BACKGROUND ...... 1 1.2 STUDY AREA ...... 3 1.3 STUDY PURPOSE AND OBJECTIVES ...... 3 2 STRATEGIC AND PLANNING ISSUES ...... 4 2.1 ALIGNMENT WITH IDP AND WSDP ...... 4 2.1.1 Mamusa ...... 4 2.1.2 Lekwa-Teemane ...... 5 2.2 Water supply chain ...... 5 2.3 STRATEGIC IMPORTANCE AND DELIVERY TARGETS ...... 6 2.3.1 Providing Basic Services to the Community ...... 6 2.3.2 Supporting economic growth and developments ...... 7 2.3.3 Address water scarcity and droughts ...... 8 2.3.4 New infrastructure to improve water services quality ...... 9 2.3.5 Flagship projects ...... 9 2.4 Agreement of parties ...... 9 2.5 Level of service ...... 11 2.6 Economic growth requirements ...... 11 2.7 Water scarcity ...... 11 2.8 FUNCTIONAL CRITICALITY OF SCHEME AND SPECIFIC COMPONENTS ... 12 2.9 EXTENT OF COST ...... 13 2.9.1 Cost Basis ...... 13 2.9.2 Construction Cost...... 14 2.9.3 Operation and Maintenance Cost ...... 14 2.10 Comparison with Industry Guidelines ...... 16 2.11 AVAILABILITY OF CO-FUNDING ...... 17 3 THE SOCIAL CRITERIA ...... 20 3.1 Population and household features ...... 20 3.1.1 Population ...... 20 Population Mamusa 20 Population Lekwa-Teemane 23 3.1.2 Household composition ...... 23

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3.1.3 Housing conditions ...... 24 3.1.4 Migration ...... 25 3.2 Basic and higher service levels ...... 25 3.3 Number of poor households to be served ...... 27 3.3.1 Household income distribution ...... 27 3.3.2 Multi-deprivation indicator ...... 28 3.3.3 Social grants ...... 29 3.3.4 Indigent ...... 30 Indigent policy 30 Number and proportion of indigent households 30 3.4 Estimated number of jobs to be created ...... 33 3.4.1 DWA in-house construction standards ...... 33 3.4.2 Jobs created ...... 33 3.5 Affordability of the proposed water tariffs ...... 34 3.6 Number of associated services benefiting ...... 36 3.6.1 Health facilities ...... 36 3.6.2 Schools and crèches ...... 37 3.6.3 Community halls...... 37 3.7 Socio-political support for the proposed development ...... 37 3.7.1 Mamusa ...... 37 Support and priorities 37 Social amenities 38 Water services projects 39 Water issues 40 Housing projects 40 3.7.2 Lekwa-Teemane ...... 41 Water services projects 41 Housing projects 41 3.8 Determining the social component...... 41 3.8.1 Guidelines on how to calculate the social component ...... 41 3.8.2 The Mamusa project ...... 43 3.8.3 Norms used ...... 44 3.8.4 Social component for the Mamusa project ...... 45 4 ECONOMIC CRITERIA ...... 46

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4.1 Number of business and industries to be served ...... 46 4.2 Expected economic value to be generated by new business ...... 47 4.2.1 Employment ...... 49 4.2.2 Production ...... 50 4.2.3 Value-added ...... 52 4.2.4 Effects of investment in water infrastructure ...... 54 4.2.5 Investment in rural infrastructure ...... 55 4.3 Number of SMMEs and BEE enterprises to benefit from project ...... 57 4.4 Regional economic benefit from the proposed project ...... 59 4.4.1 The economically active and unemployed ...... 59 4.4.2 Sector of employment ...... 60 4.4.3 Water productivity ...... 60 4.4.4 Gross value added ...... 62 4.4.5 Estimated GDP 2030 ...... 64 5 TECHNICAL CRITERIA ...... 66 5.1 MASTER PLAN PROPOSAL ...... 66 5.2 APPROPRIATENESS AND ACCEPTABILITY OF THE SOLUTION ...... 66 5.2.1 Acceptability of the Solutions ...... 66 Mamusa Local Municipality 66 Lekwa-Teemane Local Municipality 67 5.2.2 Existing capacity of infrastructure vs. demand ...... 68 Mamusa Local Municipality 68 Lekwa-Teemane Local Municipality 69 5.2.3 Infrastructure description ...... 70 Mamusa Local Municipality 70 Lekwa-Teemane Local Municipality 70 5.3 Optimal Choice of bulk infrastructure ...... 71 5.3.1 Bulk water scheme for Greater Mamusa Area ...... 71 Pipe material and diameter 71 Design criteria 71 Pipeline cost optimization 74 Operational philosophy 76 Pipeline and pump station hydraulics 80 Transient analyses 82

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Electrical supply 85 5.3.2 Water treatment works at Bloemhof...... 86 Raw Water Quality Data 86 Final Water Quality Data 89 Process Design 93 The appropriateness of the location 96 5.3.3 Abstraction Works Bloemhof ...... 96 Option 1: Connection to existing 450mm Ø raw water outlet at Dam wall 96 Option 2 Upgrading of the Existing Abstraction Works 96 General Design Criteria and Assumptions 97 Design Floods 97 Proposed Infrastructure 98 5.4 APPROPRIATE WATER RESOURCE CHOICE AND WATER ALLOCATION .. 98 5.5 COMPLIANCE TO WATER DEMAND/ CONSERVATION OBJECTIVES ...... 100 5.6 OPTIMAL CHOICE OF BULK INFRASTRUCTURE ...... 101 5.7 PROOF OF BEST SUITED TECHNOLOGY ...... 102 6 INSTITUTIONAL CRITERIA ...... 103 6.1 Ownership Model ...... 103 6.2 Confidence in the capacity of the institution to implement ...... 103 6.3 Agreement on infrastructure ownership per scheme component ...... 103 6.4 Agreement on implementing responsibility (per scheme component) ...... 104 6.5 Proof of implementation capacity (capital expenditure over last 3 years) ...... 104 6.5.1 Mamusa Municipality Capital Expenditure ...... 104 6.5.2 Dr Ruth Segomotsi Mompati District Municipality ...... 105 6.5.3 Sedibeng Water North West Region ...... 107 Water expenditure and income 108 6.5.4 Lekwa–Teemane Municipality Capital Expenditure ...... 110 Detailed expenditure 111 Conclusion 112 6.6 History on past implementation quality & performance ...... 113 6.7 Agreement on operating responsibilities per scheme ...... 113 6.8 Proof of adequate staff numbers and skills levels per scheme component...... 114 6.9 History on water services interruptions ...... 114 6.10 Commitment for above by Institutional leadership ...... 115

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6.11 Cooperation agreement between key stakeholders ...... 115 6.12 Approval of Institutional arrangement ...... 115 6.13 Cost Recovery...... 115 6.14 Water Conservation and Demand Management ...... 115 6.15 Responsibilities and Accountability ...... 116 7 FINANCIAL CRITERIA ...... 117 7.1 AVAILABLE FUNDING ...... 117 7.1.1 DWA Regional Bulk Infrastructure Grant ...... 117 7.1.2 Counter Funding ...... 117 7.2 FUNDING CONDITIONS ...... 117 7.3 FINANCIAL ANALYSIS OF COST AND INCOME PROJECTIONS ...... 117 7.3.1 FINANCIAL STATUS, PERFORMANCE & CREDITWORTHINESS ...... 118 8 LEGAL CRITERIA ...... 120 8.1 APPROVED WATER LICENSE ...... 120 8.1.1 Abstraction WULA ...... 121 8.1.2 Wetland WULA...... 122 8.2 Environmental Authorization for Construction of Scheme ...... 123 8.3 LAND AND PROPERTY RIGHTS ...... 123 8.3.1 Bulk pipeline property rights ...... 123 Landowners 123 Eskom 124 Transnet 124 Road Reserve Wayleave 125 Other Services 125 8.3.2 Bloemhof WTW ...... 125 8.3.3 Bloemhof abstraction works ...... 125 9 SUSTAINABILITY CRITERIA ...... 127 9.1 FINANCIAL VIABILITY ...... 127 9.1.1 Financial ...... 127 9.1.2 Economic ...... 127 9.2 OPERATING AND MANAGEMENT CAPACITY, PERFORMANCE AND COMMITMENT ...... 128 9.3 ENVIRONMENTAL AND SOCIAL ACCEPTABILITY AND IMPACT ...... 128 10 CONCLUSION ...... 129

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LIST OF TABLES

Table 1. Estimated project cost ...... 14 Table 2. Cost estimate ...... 17 Table 3. Future projected number of households by area, 2007 - 2030 ...... 21 Table 4. Future projected population by area – 2007 - 2030 ...... 22 Table 5. Future projected population of Schweizer-Reneke ...... 22 Table 6. The population of Bloemhof ...... 23 Table 7. Type of main dwelling ...... 24 Table 8. Dwelling ownership ...... 25 Table 9. Map of Ipelegeng, Schweizer-Reneke indicating levels of water and sanitation and areas of future development ...... 26 Table 10. Water and sanitation level of service in the Mamusa Municipality ...... 27 Table 11. Household income per annum 2001 ...... 27 Table 12. Number of persons receiving grants ...... 30 Table 13. Household income distribution per annum 2001 ...... 32 Table 14. Household income distribution per annum 2001 ...... 32 Table 15. Temporary job creation opportunities ...... 34 Table 16. Assumptions and calculations of water affordability 2010/2011 ...... 35 Table 17. Clinics and CHCs with the hours of operation per district ...... 36 Table 18. Average annual daily demand (AADD) of the proposed project ...... 44 Table 19. Norms used in the water allocation per category ...... 44 Table 20. Calculation of the social component ...... 45 Table 21. Operation and maintenance costs ...... 48 Table 22. Macroeconomic effects of a 10% increase in water infrastructure ...... 54 Table 23. Contract participation performance ...... 57 Table 24. The economically active aged 15 to 65 years in Mamusa and Lekwa-Teemane in 2007 60 Table 25. Sector of employment of persons aged 15 to 65 years in 2007 ...... 60 Table 26. Number of people employed in each board economic sector for every million cubic metres of registered water use in that sector ...... 61 Table 27. Water productivity in Mamusa ...... 62 Table 28. Percentage contribution to Gross Value Added 2010 (in R‟000 and constant 2005 prices) 63 Table 29. Friction Coefficients ...... 72

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Table 30. Control Valve Flow Parameters ...... 79 Table 31. Pump Station Parameters ...... 81 Table 32. Pipeline Parameters ...... 82 Table 33. Pipeline Parameters ...... 83 Table 34. Raw Water Data in the Bloemhof Dam ...... 86 Table 35. Operational Data of the Bloemhof WTP ...... 89 Table 36. Data from the BDS on the Water Quality produced by the Bloemhof WTP...... 91 Table 37. Arlington Port Weir C9H021 Data ...... 98 Table 38. WC/WDM Cost breakdown ...... 101 Table 39. MTEF budget in R‟000 ...... 104 Table 40. Total revenue and contribution to this revenue from government grants and subsidies 105 Table 41. MTEF budget in R‟000 ...... 106 Table 42. MTEF budget in R‟000 ...... 107 Table 43. Operating and capital MTEF Budget 2009/2010 to 2012/2013 ...... 108 Table 44. Income and expenditure 2010/2011 ...... 108 Table 45. Water expenditure and income in R‟000 ...... 109 Table 46. Operating Expenditure by type in R‟000 ...... 110 Table 47. Lekwa-Teemane 2009/2010 budget and actual performance ...... 110 Table 48. Lekwa-Teemane: Operating expenditure by type ...... 112 Table 49. Status of Water Conservation in Mamusa and Lekwa–Teemane Municipalities .... 116 Table 50. Current Water Use Licence Authorisation data ...... 121 LIST OF FIGURES

Figure 1. Dr RS Mompati District Municipality Locality Map ...... 2 Figure 2. Population growth Mamusa ...... 21 Figure 3. Percentage female headed households ...... 23 Figure 4. North West index of multiple deprivation 2001 ...... 28 Figure 5. Social grant recipients in Mamusa and Lekwa-Teemane 2007 ...... 29 Figure 6. Water priorities in the Mamusa IDP 2010/2011 ...... 39 Figure 7. Labour multipliers ...... 49 Figure 8. Employment based on labour multipliers of the electricity, water and gas sector applied to the operation and maintenance phase of the project ...... 50 Figure 9. Production multipliers ...... 51

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Figure 10. Estimated production multipliers of the operation and maintenance phase of the project (Scenario one) ...... 52 Figure 11. Value added multipliers ...... 53 Figure 12. Value added per R1 million , water, gas and electricity spending ...... 53 Figure 13. Real net fixed investment in agriculture, 1970 – 2006 ...... 56 Figure 14. Target values according to DWA in-house construction standards ...... 57 Figure 15. Northwest gross value added 2010 ...... 62 Figure 16. Gross value added 2010 in Mamusa ...... 63 Figure 17. Gross value added 2010 in Lekwa-Teemane ...... 64 Figure 18. Contribution of municipalities to the North West GDP 2010 ...... 64 Figure 19. Growth in Mamusa's GDP to 2030 ...... 65 Figure 20. Growth in Mamusa's GDP to 2030 ...... 65 Figure 21. Graph 1: Bloemhof Pump Station and Graph 2: Olievenfontein Pump Station ...... 76 Figure 22. Line of Sight Profile (Bloemhof to Schweizer-Reneke) ...... 77 Figure 23. Line of Sight Profile (Bloemhof to Olievenfontein pump station) ...... 77 Figure 24. Turbidity Percentile Graph ...... 89 Figure 25. Process issues to consider during Design of a Suitable Process Train for Potable Purposes 94 Figure 26. Process Train Options ...... 95 Figure 27. Operating and Capital MTEF Budget 2009/2010 to 2012/2013 ...... 105 Figure 28. Operating and capital MTEF Budget 2009/2010 to 2012/2013 ...... 106 Figure 29. Percentage expenditure of operating budget on water 2009/2010 to 2012/2013 .. 109 Figure 30. Lekwa-Teemane Actual and Budgeted income and expenditure 2009/2010 ...... 111

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APPENDICES

Annexure A. Mamusa Local Municipality. Final IDP reviewed document 2010-2011

Annexure B. Lekwa-Teemane IDP draft 2011 - 2016

Annexure C. Dr Ruth S Mompati District Municipality Integrated Development Plan 2011-2016

Annexure D. Bulk Water Supply Scheme – Preliminary Design Report

Annexure E. Extension of the Bloemhof WTP Preliminary Design Report

Annexure F. Preliminary Design report: Bloemhof abstraction

Annexure G. Reconciliation Strategy for Schweizer-Reneke Town in Mamusa Local Municipality

Annexure H. Reconciliation Strategy for Bloemhof Town in Mamusa Local Municipality

Annexure I. Interested and affected parties and comments on the draft BA Report

Annexure J. Social and economic criteria report of the Implementation

Annexure K. Institutional Assessment Report

Annexure L. Mamusa and Lekwa-Teemane Local Municipalities‟ Free Basic Policies

Annexure M. WSDP

Annexure N. Title Deed Report – Pipeline

Annexure O. Valuation Report

Annexure P. Eskom Application

Annexure Q. Transnet Application

Annexure R. Department of Transport – Wayleave Approval

Annexure S. Water Use Licence Application letter

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DR RUTH SEGOMOTSI MOMPATI DISTRICT MUNICIPALITY REGIONAL BULK INFRASTRUCTURE GRANT - IMPLEMENTATION READINESS REPORT

1 INTRODUCTION

1.1 BACKGROUND The Dr Ruth Segomotsi Mompati District Municipality (DRSMDM) is one of four district municipalities within the North West Province and comprises of numerous poor rural areas formerly situated in the Bophuthatswana homeland. The District Municipality includes six local municipalities (LMs), two of which are the Mamusa and the Lekwa-Teemane LMs. Both these LMs lie in a semi-arid area with an average rainfall ranging between 400 and 500 mm and an average evaporation of between 1900 and 2000 mm per year. The economy of both areas revolves around agriculture, consisting mainly of cash crop and livestock production. The DRSMDM is the Water Service Authority in all the areas under its jurisdiction. In terms of this proposed project, the Mamusa LM provides water services to the town of Schweizer-Reneke and the Lekwa-Teemane LM to the town of Bloemhof.

The Mamusa Local Municipality is approximately 3 615 square kilometres in extent which forms 7.61% of the total area of the DRSMDM‟s area. Schweizer-Reneke is situated approximately 58 km north-west of Bloemhof, and about 68 km to the south-east of Vryburg, on the R34 road.

Lekwa-Teemane Local Municipality is made up of the disestablished municipalities of Christiana and Bloemhof with an area of approximately 3 681 km². Bloemhof is situated along the N12 road in the Vaal River valley between the towns of Wolmaranstad and Christiana, and it is approximately 150 km northeast of Kimberley.

Initial studies investigating Schweizer-Reneke‟s population growth indicated a subsequent shortfall in water supply, thus alternative sources of bulk water supply were sought. The smaller towns of the Mamusa Municipality, namely Amalia, Migdol and Glaudina, have sufficient local groundwater resources to meet the current demands.

The existing bulk water facilities at Bloemhof were commissioned in 1992 and designed for a capacity of 9 600 mᵌ/d serving the projected population up to 2008. The abstraction works encounters abstraction difficulties during drought periods and flood occurrences due to its design. However, the abstraction works and the WTW are currently operating at full capacity and hence the proposed upgrading of these facilities.

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Figure 1. Dr RS Mompati District Municipality Locality Map

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1.2 STUDY AREA The study area concerns the towns of Schweizer-Reneke that requires a water supply from the Bloemhof WTW via a bulk pipeline and Bloemhof that needs upgrading of the abstraction works and WTW.

The Bloemhof abstraction works is located next to the weir in Vaal River approximately 200 m south of the N12. The WTW is located on the western side of Bloemhof approximately 400 m north of the abstraction works next to the R34 road to Schweizer-Reneke.

The rising pipeline from the Bloemhof WTW to Schweizer-Reneke will follow the R34 provincial road between Bloemhof and Schweizer-Reneke. The pipeline will be located within the road reserve and in general will be about 4.5 m from the eastern boundary of the road reserve. Two pump stations will be constructed. The first pump station will be at Bloemhof, located adjacent to the existing Bloemhof water treatment works. A pump station will be located at Olievenfontein 25.1 km from the Bloemhof pump station. The pump station will be located adjacent to the road on the eastern side of the road on privately owned farmland. The Vaalpoort storage tank will be located at the highest point along the pipeline route profile 48 km from the Bloemhof pump station and 22.9 km from the Olievenfontein pump station. A tank will be located adjacent to the road on the eastern side of the road on privately owned farmland.

Within Schweizer-Reneke, the pipeline route will be along existing roads for a distance of 2.1 km up to the pipeline‟s endpoint at the existing Schweizer-Reneke reservoir.

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‟ (DWA) Regional Bulk Infrastructure Grant (RBIG) program, to apply for a grant from DWA. The grant is required by the DRSMDM to counter fund the Mamusa 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 to and listed in the Integrated Development Plans (IDP) and Water Services Development Plans (WSDP) of the participating municipalities.

2.1.1 Mamusa

Support for the bulk water project is expressed in the 2010/2011 Mamusa IDP. In addition, water is the highest priority issue in Mamusa. The bulk water project is also supported in Dr Ruth Segomotsi Mompati 2010/2010 Top Layer Delivery Budget and Implementation Plan.

Numerous water projects were noted in the Mamusa IDP, which included (all amounts VAT included):

 Bulk water project: Feasibility complete. Budget R10 million for design.

 Water treatment plant maintenance to improve water quality funded by the DM at R2 million

 Provide house connections in Molatswaneng to reduce waste: No budget.

 Request DM funds to upgrade Wenzel Dam

 Repair old and bypassed water meters: To be funded by the DM at R150 000

The water issues noted in the IDP include the continuous low water pressure that affects the higher lying areas of the Schweizer-Reneke town, namely Extension 4, 5, 6 and new town/Bo-Dorp. The result is that these residents often receive water only between midnight and 6 am. Complaints have been received by the Municipality from both residents and councillors. In the past two years, community marches by residents of Extension 4, 5, and 6 have taken place, which has been reported in the news. Problems at the water purification works require residents to use water sparingly. A notice to this effect was issued by the municipality on 16 November 2011.

During drought episodes, the Wentzel Dam becomes empty and the last time that this occurred was in 1983.

Although no major industries are reliant on water, it is a major component of the production process. This is a major inhibitor for attracting and establishing businesses in Schweizer-Reneke. It is perceived that Bloemhof, Vryburg and Wolmaransstad have competitive advantages because of its reliable water resources. Previously the town lost the establishment of a Coca-Cola depot because

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the water supply could not be guaranteed. Predictably, schools are larger water consumers than industry in Schweizer-Reneke.

2.1.2 Lekwa-Teemane

The Lekwa-Teemane IDP‟s first priority is the upgrading of the water purification and abstraction point because the purification plants at both Bloemhof and Christiana are currently running at 100% capacity. Bulk water supplied to Extension 5 Boitumelong in Bloemhof has been implemented at a cost of R4,6 million. Buckets have been eradicated in Boitumelong and Coverdale. The sewage treatment works in Bloemhof has been upgraded at a cost of R20 million. There are no basic sanitation backlogs. Sewer networks need to be upgraded in both Bloemhof and Christiana, which is the third priority in the Lekwa-Teemane IDP.

Refer to the following sources:

 Mamusa Local Municipality. Final IDP reviewed document 2010-2011 attached Annexure A

 Lekwa-Teemane IDP draft 2011 - 2016 attached as Annexure B

2.2 WATER SUPPLY CHAIN The proposed Mamusa Bulk Water Supply Scheme includes three components, which care to refurbish and increase the existing capacity of the abstraction works in Bloemhof, to refurbish and increase the capacity of the WTW in Bloemhof and to establishment a bulk water supply pipeline between Bloemhof WTW and Schweizer-Reneke‟s bulk storage facility. In addition, groundwater sources need to be developed for Schweizer-Reneke, Migdol, Glaudina and Amalia.

Additional groundwater sources must be developed for Schweizer-Reneke. The local groundwater resource potential is suitable to augment supplies with an additional 1.1 Mℓ/day according to Golder Report.1 The cost of developing an additional groundwater source is estimated at R 2 million (VAT included), which will be performed in a later phase of the overall project.

The projected shortfall for Migdol and Glaudina is less than 0.7 Mℓ/day, which can be obtained from local groundwater resources. Based on the nitrate content Class 2 water qualities are in use. Future groundwater exploration target areas (M1 and G1 – refer Figure 19 of the Golder report) were

1 Report No.12348-9567-1: Groundwater Study for the Greater Mamusa Area – North West Province – April 2010

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subsequently selected in close proximity of surface drainages and well removed from on-site sanitation and crop-fertilizing activities. The groundwater source development to provide an additional supply of 0.7 Mℓ/day is estimated to cost R1.3 million (VAT included).

The projected shortfall for Amalia is 1.3 Mℓ/day, which can be sourced locally in three prioritized target areas. The nitrate content in some existing production boreholes is of Class 2 water quality, requiring blending with other sources to ensure a potable water supply. Prioritized target areas (A1 to A3 – refer Figure 19 of the Golder report) have been identified for exploration of additional sources, at an estimated cost of some R2.4 million (VAT included).

2.3 STRATEGIC IMPORTANCE AND DELIVERY TARGETS This project will contribute to poverty reduction, upliftment and economic growth in many ways. It is a relatively large project, which 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 new pipeline, abstraction works and water treatment works will have a major stimulus on:

 the water service provider‟s business

 socio-economic benefits resulting from a secure water resource

 construction of the scheme with impacts on spending, employment, and taxes

 construction of the project is likely to represent a major economic stimulus or „shock‟ to the regional economy because the project is expected to stimulate significant economic activity

The Framework for Implementation of bulk regional projects sets out drivers of regional bulk infrastructure, which are described below2

2.3.1 Providing Basic Services to the Community

Backlogs in basic services are constrained by bulk water provision. Housing developments are needed in Schweizer-Reneke and Bloemhof to accommodate the population influx from farms and smaller settlements, which in turn requires reticulated water services.

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

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Thus, the Schweizer-Reneke area is at risk of severe water shortages and it is going to depend on the pipeline for future water supply. In the past, the Wentzel Dam has dried up and climate change may affect the yield of boreholes. Critical shortages at the Wentzel Dam suggest that a pipeline from the Vaal River would avert this situation.

2.3.2 Supporting economic growth and developments

Bulk infrastructure must serve both economic and social needs.

Traditionally, 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. Mamusa and Lekwa-Teemane Municipalities are experiencing low levels of labour force participation and employment. The scale of the proposed project and the economic conditions experienced in the project area, poses opportunities for low and semi-skilled labour although capacity constraints in terms of the availability of a skilled workforce may hamper project delivery.

During the proposed construction phase, as well as after the completion of construction, jobs will be created. It is anticipated that most of these jobs, particularly those that require semi- or unskilled labour, will be filled from the local population. Such increased employment, combined with increased income, will affect positively on the local and regional 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.

Should the anticipated revitalization of the bulk water infrastructure stimulate the establishment of new businesses as anticipated, more employment opportunities will result, and related training opportunities should result in a higher skills level for the area. The increasing output from the schemes will increase the contribution to the food industry, which is one of South Africa‟s most significant and vibrant sectors, and the largest manufacturing industry. Water contributes most to the services sector, followed by agro-industries. The agricultural sector has the least direct contribution from water, although it is the most intensive user of water.

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,

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output grows by approximately R 6.67, payments to primary production sectors increase by R 1.49, and another R 1.01 is contributed to household income3.

While providing water does not necessarily result in economic growth, a lack of water or poor water quality can and does inhibit growth. The development of Schweizer-Reneke has already been affected because of water assurance issues e.g. a bottling factory settled in another town as a result.

A challenge of the water sector is to align the provision of water with the spatial and sectorial growth of the economy.4 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 are needed too. The development and maintenance of quality water infrastructure is central to achieving economic growth.5

2.3.3 Address water scarcity and droughts

Regional bulk infrastructure is needed to augment water supply in water scarce areas. Climate change is estimated to have a significant effect on water resource planning.

Extreme droughts common to the North West need to be taken into account. The Wentzel Dam is not a reliable source of water because it has dried up in the past. The Mamusa Municipality issued a notice on 16 November 2011 to all water consumers that technical problems at the water purification plant were causing water shortages.

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.

3 Juana, J.S. 2008. Efficiency and equity considerations in modelling inter-sectoral water demand in South Africa. Thesis. University of Pretoria. February 2008. 4 Department of Water Affairs and Forestry (2008) Strategic framework for sustainable growth and development – A discussion document. May 2008. P.3. 5 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).

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2.3.4 New infrastructure to improve water services quality

Poor drinking water quality usually associated with high salinity levels are a particular concern in this study area. In addition, high water losses and supply interruptions are common and need to be addressed through water conservation and demand management plans.

WCDM plans are required in the study area and the implementation of these plans requires a determined effort. The quality of water services will be affected by the Bloemhof water treatment works, which is currently operating at full capacity.

Unsafe water supply causes childhood diarrheal diseases, which is a preventable cause of under-five mortality. According to the General Household Survey, 5.2% of North West residents perceived their water was unsafe for drinking in 2009. This is higher than rates of less than 3% recorded in 2005- 2007.

2.3.5 Flagship projects

The Mamusa pipeline is a large-scale regional project spanning two municipalities and thus subscribes to the criteria of a flagship project.

2.4 AGREEMENT OF PARTIES The project forms part of the DRSMDM District Municipality‟s Integrated Development Plan as adopted by Council. The IDP is the Municipality‟s principle strategic plan that deals with the most critical developmental needs of the municipal area. The local community as well as interested stakeholders and role players are consulted during the drafting and annual review of the IDP. Therefore, it can be said that all parties agree on the project‟s necessity.

All key interested and affected parties (I&AP) were informed of the need for the Mamusa Bulk Water Scheme. Stakeholders were made aware of the proposed solution and were granted an opportunity to raise concerns and offer alternative suggestions during the Environmental Impact Assessment (EIA) consultation process done in 2011. The EIA was executed by MDA Town Planners and Environmental Consultants and documented in the Draft Basic Assessment Report (dBAR) dated November 2013 (Reference No. NWP/EIA/59/2013). The dBAR is in the process of being updated and the expected submission date of the Final BAR to the Department Economic Development, Environment, Conservation and Tourism – North West Provincial Government is January 2014. The submission is being delayed till January 2014 since the DEDECT requested that the public

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participation be reviewed because of the time elapsed since the first submission. The dBAR can only be submitted with the inclusion of the reviewed public participation process.

The Public Participation Process (PPP) undertaken in 2011 included the following measures:

 Identifying the I&APs within the community and informing them of the proposed project. The main I&APs were identified as follows:

 Department of Water Affairs  Department of Agriculture, Forestry and Fisheries  Mamusa Local Municipality  Lekwa-Teemane Local Municipality  Department of Transport, Roads and Community Safety  Owner of portion 3 of the farm Olievenfontein 114  Owner of portion 12 of the farm Vaalpoort 84  Transnet  Department of Public Works, Roads and Transport  Understanding and clearly documenting all issues, concerns and suggestions raised by the I&APs.

 Identifying areas that require further special investigation.

 Placing notice boards at the proposed construction sites informing the public of the proposed project.

 Placing advertisements in the local and provincial newspapers detailing the process as well as the deadline for comments on the proposal.

Concerns from the I&APs included the following:

 The Department of Transport, Roads and Community Safety has approved the project. However, certain conditions were raised. These conditions include the following: Vryburg Roads Technician should be informed prior to the commencement of any work, the necessary and prescribed road signs for the proposed works must conform to the SA Manual for Road Traffic Signs, etc.

 Transnet forwarded a guideline for application for wayleaves / level crossings.

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 The Department of Agriculture, forestry and fisheries mentioned that a license for the removal of camel thorn trees will need to be obtained before the removal of these trees. Note that an application for the above can only be submitted after the approval of the BAR.

 The Chief Directorate: Roads Management of the Dr Ruth Segomotsi Mompati District Office: DPWRT has no comments on the dBAR.

For the reviewed process the above mentioned parties will be consulted and their concerns/ comments addressed.

2.5 LEVEL OF SERVICE Schweizer-Reneke is divided into four areas, namely Schweizer-Reneke town, Roshunville, Charon and Ipelegeng. All areas (except for Ipelegeng Extension 3) are supplied with metered yard connections and full water-borne sewer systems. Some parts of Ipelegeng Extension 3 are still serviced with communal standpipes. The Ipelegeng Extension 6 (Mareesin Farm Phase 1) is complete and comprises of housing with full waterborne sanitation and water services.

The Bloemhof area is also divided into four areas namely Bloemhof town, Boitumelong, Caverndale and Salamat, these areas are supplied with metered yard connections and full water borne sewer system with the exception of some of parts of Boitumelong proper and Extension 1 which are still serviced with communal standpipes. These are being systematically serviced with yard connections and a full water borne sewer system. The new extensions of Boitumeleng are to be provided with yard connections and water borne sewer systems.

2.6 ECONOMIC GROWTH REQUIREMENTS Please refer to Section 2.3.2 „Supporting economic growth and developments‟ detailed above.

2.7 WATER SCARCITY According to the Reconciliation Strategy for the Schweizer-Reneke Town Area in Mamusa Local Municipality in the Lower Vaal WMA (2010) Schweizer-Reneke is facing a water resource deficit that has to be addressed (refer to Annexure G). However the Reconciliation Strategy for Bloemhof Town in Lekwa-Teemane Local Municipality in the Lower Vaal WMA (2010) report (refer to Annexure H) indicates that Bloemhof is not facing a water resource deficit and that its primary water source, the

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Bloemhof Dam, is sufficient to sustain the current and projected future water requirements till 2030. The strategy points out that the projected peak water requirements will exceed the capacity of the WTW and abstraction works by the year 2010 and that both these facilities have to be upgraded.

Schweizer-Reneke‟s demand is currently met by means of two water sources, i.e. the Wentzel Dam as primary supply and the Townlands Borehole Scheme as its supplementary supply during dry periods. The implementation of the proposed bulk supply scheme from Bloemhof Dam will address this water scarcity and will ensure a sustainable yield even in dry periods.

2.8 FUNCTIONAL CRITICALITY OF SCHEME AND SPECIFIC COMPONENTS The intention of the project is twofold, namely to supply bulk water to Schweizer-Reneke and to upgrade the water abstraction and treatment facility at Bloemhof. 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 populations of Schweizer-Reneke and Ipelegeng are projected to increase from 64 261 persons in 2010 to 86 391 persons in 2030 or by 35%. This brings about an increase in the Average Annual Daily Demand (AADD) of 2 304 mᵌ/d with a total AADD in 2030 of 9 373.2 mᵌ/d.

The demand is currently met by two water sources, i.e. the Wentzel Dam as primary supply and the Townlands Borehole Scheme, which is a supplementary source during dry periods.

The Wentzel Dam, situated in the Harts River, has a full supply capacity of 6.203 million mᵌ. The 1:100 year stochastic firm yield of the source, with no ecological water release, is calculated at 1.08 million mᵌ. This is the amount of water available for primary water use.

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Bloemhof's water is abstracted from the Vaal River at the weir near the Bloemhof Dam where the existing abstraction works is situated. Water is conveyed to the existing water treatment works (WTW) in Bloemhof. The existing facilities were commissioned in 1992 and designed for a capacity of 9 600 mᵌ/d serving the projected population to 2008. The abstraction works are also encountering abstraction difficulties during droughts and flood occurrences due to its design. However, the abstraction works at the weir and the WTW are running at full capacity and hence the proposed upgrade.

Several options were investigated during the feasibility phase of the project. The preferred and approved option is to provide purified water from the Bloemhof WTW abstracting water from the weir in the Vaal River near Bloemhof Dam. This implies that the following infrastructure and facilities be established and/or upgraded:

 Increase the existing capacity of the abstraction works in Bloemhof by upgrading the current facility

 Increase the capacity of the WTW in Bloemhof to meet the projected water demand of the area

 Establish a bulk water supply pipeline between Bloemhof WTW and Schweizer-Reneke bulk storage facility

The Mamusa Water Supply Scheme project needs to be implemented because of the reasons referred to in Section 2.3.

2.9 EXTENT OF COST 2.9.1 Cost Basis

The base date for the cost estimates is October 2013. The cost estimates were based on historical tendered unit rates for similar work in South Africa as well as budget costs obtained from suppliers for some of the equipment to be supplied. Historical rates were escalated to the base date based on the known average yearly South African inflation rates.

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2.9.2 Construction Cost

The estimated total cost of the project is R 359 045 011.18 (incl. VAT and professional fees). The cost comprises of the following as illustrated in the table below.

Escalation was calculate on the basis that the project will be implemented over a three year period with 15% of the construction completed in year one, 35% in the second year and the rest, 50%, in the final year (refer to table below).

Table 1. Estimated project cost

Water Treatment Abstraction Bulk Pipeline TOTALS Works Works

Preliminary and General R 18 048 281.79 R 17 000 000.00 R 1 751 600.00 R 36 799 881.79

Civil R 92 706 623.44 R 46 394 003.00 R 9 588 719.50 R 148 689 345.94

Reservoirs R 11 887 204.99 R 19 960 000.00 - R 31 847 204.99

Mechanical Electrical R 2 075 380.85 R 29 547 500.00 R 4 207 171.50 R 35 830 052.35

Contingencies R 18 707 623.66 R 16 935 225.45 R 2 332 123.65 R 37 974 972.76

SUB TOTAL (excl. VAT) R 143 425 114.73 R 129 836 728.45 R 17 879 614.65 R 291 141 457.83

Professional fees & Disbursements R 14 565 542.85 R 7 393 776.27 R 1 855 395.68 R 20 741 237.63

Approval from Public Authorities R 1 502 313.54 R 320 902.02 R 125 000.00 R 2 010 862.34

TOTAL excl. VAT (CIVIL, M & E) R 159 492 971.12 R 137 551 406.74 R 19 860 010.33 R 313 893 557.80

VAT (14%) R 22 329 015.96 R 19 257 196.94 R 2 780 401.45 R 43 945 098.09

TOTAL incl. VAT (CIVIL, M & E) R 181 821 987.08 R 156 808 603.68 R 22 640 411.78 R 357 838 655.89

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Table 2. Escalation Calculated over a three construction period

Year 1 Year 2 Year 3

Description 01-May-14* 1 May 2014 - 30 1 May 2015 - 30 1 May 2015 - 30 April 2015 April 2016 April 2016

Estimated Construction Costs R 326 207 754.17

1 May 2014 - 30 April 2015 (15%) R 48 931 163.13

Escalation (6 months) R 1 919 593.24

1 May 2015 - 30 April 2016 (35%) R 114 172 713.96

Escalation (18 months) R 13 971 192.08

1 May 2016 - 30 April 2017 (50%) R 163 103 877.08

Escalation (30 months) R 34 603 863.66

Total Escalation R 50 850 756.36 R 128 143 906.04 R 197 707 740.74

Total Project Value (excluding VAT) R 376 702 403.14

VAT @ 14% R 52 738 336.44

TOTAL (including VAT) R 429 440 739.58

The estimated escalation was calculated on 8% per annum or 0.64% per month. The Construction value of R 313 893 557.80 (VAT excluded, professional cost included) was escalated from October 2013 to May 2014 (expected construction commencement). From May 2014 an escalation of 0.64% was applied

The total project value is estimated at R 429 440 739.58 VAT included.

2.9.3 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 DWA Guidelines with the following assumptions with the exclusion of escalations:

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Water Treatment Works Operational & Maintenance:

Electricity Cost R 0.20/kℓ Chemical Cost R 0.42/kℓ Labour (Class C works) R 0.20/kℓ Mechanical / Electrical Installations R 0.17 Civil / Building installations R 0.04 TOTAL WTW: R 1.03/kℓ

Abstraction Works Operational & Maintenance:

Raw water purchase cost R 3.19/kℓ Electricity cost R 0.11/kℓ Mechanical/Electricity maintenance R 0.02/kℓ Civil / Building R 0.03/kℓ TOTAL Abstraction Works: R 3.35 /kℓ

Bulk Pipeline

Mechanical/Electricity R 3.26/kℓ Civil / Building R 0.34/kℓ TOTAL Bulk Pipeline: R 3.60/kℓ

The unit cost for Bloemhof amounts to R 4.38/kℓ and R 7.98/kℓ for Schweizer-Reneke.

2.10 COMPARISON WITH INDUSTRY GUIDELINES The prosed upgrade of infrastructure will provide capacity to the entire population of Bloemhof and Schweizer-Reneke. The combined population to be served by the upgrade is approximately 93 520 for the year 2010.

The capital cost includes the upgrading of the Bloemhof WTW, abstraction works and the bulk water supply pipeline. The cost is divided according to the Industry Guide to Infrastructure Service Delivery Levels and Unit Costs – 2010 and is summarized in 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.

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As indicated in the table below, the cost estimate is relative comparable with the Industry Guide to Infrastructure. The cost for the WTW could not be compared since the Guide only allows for smaller plant.

Table 3. Cost estimate

Description Industry Guide - escalated to 2013 @ 10% per annum

Capital Cost Unit Cost -2013

Abstraction Works - Pumps, pipework and R 180.20 R 592.80 Electrical works per household

Pipeline cost per m R 1 615.97 R 1 271.45

TOTAL R 21 039 251 R 2 474.91

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

The Operational and Maintenance (O&M) cost were calculated at R 7.42 per household for Bloemhof and R 13.16 per household for Schweizer-Reneke for the year 2014 (first year after construction). This unit costs are relatively comparable with the Industry Guide to Infrastructure, which amounts to R 17.67 per household.

2.11 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 50.5%, thus amounting to R 216 867 573 (including VAT). This amount will be funded through DWA‟s RBIG. An amount of R 16.56 million was approved for the 2013/2014 financial year by DWA and it is expected that the deficit of the RBIG allocation will be funded by DWA in the following financial years.

It is expected that the DRSMDM provides counter funding to an amount of R 212 573 166.09 (including VAT). This amount is expected to be availed in the 2015/2016 financial year as part of the funding towards successfully completing the Mamusa RBIG bulk pipeline. However, the counter funding condition will not be achieved by the District Municipality due to the reasons cited below.

The District Municipality is currently engaged with the implementation of a number of projects, many of these projects also requiring counter funding such as:

 MIG Projects: R110 000 000.00

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 RBIG Greater Taung: R120 000 000.00

The total counter funding required for all infrastructure projects is in excess of R400 000 000.00 (Four Hundred Million).

The Dr Ruth SM District Municipality receives both equitable share and MIG allocations to sustain and develop infrastructure, and these allocations are insufficient to meet the current infrastructure backlogs and to fund Water Service Providers (WSPs).

The District Municipality, besides its core function as a Water Service Authority has been allocated the powers and functions of other key service deliverables such as roads and landfill sites, which have been unfunded mandates to date. MIG has been unable to fund such projects, and with no funding for these projects, it creates further strain on the Municipality to deliver to communities‟ expectations.

The following general reasons can be used to motivate possible exceptions to enable RBIG to fund the economic component or parts thereof:

a) Due to the financial status of the municipality, the WSA is not able to raise a loan from any banking institution. The argument is that in spite of the ability or opportunity of the WSA to receive income from the water services tariffs, they are not able to raise the capital upfront.

b) The motivation to fund the economic component is normally from municipalities in rural areas. Often a financially sound Water Board does not exist in such areas. Some of the Water Boards are also financially weak and do not have adequate capacity.

c) Revenue generated from providing services will be in the future, when the project is completed and supplying services. Large projects can take more than three years to be completed but the WSA has to provide the capital from the start of construction.

d) Normally the design of bulk infrastructure has a design horizon in excess of ten years. This implies that the full potential revenue that can be expected from the infrastructure will only be materialized at a later stage.

In the light of the above, the District Municipality further resolved (Council resolution 14/03/13) that both the Executive Mayor and Councillor for Infrastructure take the issue of counter funding up with the Honourable Minister of Water Affairs. There were two such meetings that have taken place with the Honourable Minister.

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A motivation will be drafted in conjunction with CoGTA to National Treasury requesting exemption on the issue of counter funding within 30 days.

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3 THE SOCIAL CRITERIA

The study concerns the towns of Bloemhof and Schweizer-Reneke, which are to benefit from the proposed scheme. These towns are situated within the Lekwa-Teemane and Mamusa municipalities respectively, which are both within the Dr Ruth Mompati District Municipality of the North West Province. Schweizer-Reneke‟s population growth and a shortage of water requires alternative sources of bulk water supply to be sought. The smaller towns of the Mamusa Municipality, namely Amalia, Migdol and Glaudina, have sufficient local groundwater resources to meet the current demands.6. Refer to Annexure J for the detail Social and economic criteria report of the implementation ready study for Bulk water supply to the Greater Mamusa area.

This section of the report addresses the social criteria, which according to the TOR includes:7

(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

(h) Number of households and people to be lifted to basic and higher service levels

3.1 POPULATION AND HOUSEHOLD FEATURES 3.1.1 Population

Population Mamusa

As part of the feasibility study, Kayamandi Development Services8 conducted an investigation to determine the number of households and population of Mamusa Municipality. Based on the historic

6 Golder and Associates cited in Kwezi V3 Engineers (2010) Feasibility study for the upgrading of the bulk water supply to the Greater Mamusa area. Contract No. BDM 2007-028. Technical report final technical reports final, version 3. April 2010. P1. 7 Dept. of Water Affairs (2011) Water services regional bulk infrastructure programme – Framework for implementation. Version V10, January 2011.P.28. 8 Kayamandi Development services (PTY) Ltd, Bulk water Supply to the Greater Mamusa Area, Population

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population growth trends, interviews, and secondary data sources, the projected number of households, population and growth rates for the various settlements within Mamusa Local Municipality were determined, which is detailed in the tables below. Households are expected to grow from 15,079 in 2007 to 18,852 in 2020 and to 20,165 by 2030 according to the low scenario. In terms of the high scenario, the households will grow to 22,777 in 2030.

Table 4. Future projected number of households by area, 2007 - 20309 Area 2007 2010 2015 2020 2025 2030 Amalia 1,444 1,533 1,672 1,763 1,831 1,894 Glaudina 525 553 596 623 644 663 Schweizer-Reneke 876 900 936 958 975 990 Schweizer-Reneke outlying 172 180 193 202 208 214 Charon/Ipelegeng and LOW SCENARIO 8,640 10,145 11,305 12,064 12,649 13,193 extensions Migdol 922 968 1,038 1,082 1,116 1,147 Mamusa farms 2,500 2,389 2,250 2,160 2,112 2,064 TOTAL 15,079 16,669 17,991 18,852 19,534 20,165 Amalia 1,444 1,548 1,725 1,855 1,967 2,075 Glaudina 525 558 612 652 685 718 Schweizer-Reneke 876 904 949 981 1,007 1,032 Schweizer-Reneke outlying 172 182 198 210 220 230 HIGH Charon/Ipelegeng and SCENARIO 8,640 10,584 12,110 13,263 14,263 15,252 extensions Migdol 922 974 1,063 1,127 1,182 1,234 Mamusa farms 2,500 2,416 2,315 2,261 2,250 2,237 TOTAL 15,079 17,165 18,971 20,349 21,573 22,777

Figure 2. Population growth Mamusa

Investigation memorandum, December 2009, P11. 9 Kayamandi Development services (PTY) Ltd, Bulk water Supply to the Greater Mamusa Area, Population Investigation memorandum, December 2009, P11.

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The population of Mamusa is projected to increase from 81,000 persons in 2010 to up to 108,000 persons in 2030 in the high growth scenario, or by approximately 1.46% per annum over this period.

Table 5. Future projected population by area – 2007 - 203010 Growth Area 2007 2010 2015 2020 2025 2030 pa (2010- 2030) Amalia 7,552 8,016 8,747 9,218 9,578 9,907 1.06% Glaudina 2,381 2,508 2,704 2,827 2,921 3,009 0.91% Schweizer-Reneke 3,241 3,330 3,463 3,545 3,606 3,662 0.48% Schweizer-Reneke 636 668 716 746 769 790 0.84% outlying LOW Charon/Ipelegeng SCENARIO 41,472 48,698 54,262 57,906 60,713 63,325 1.32% and extensions Migdol 5,071 5,323 5,709 5,952 6,138 6,308 0.85% Mamusa farms 10,465 10,002 9,421 9,042 8,841 8,641 -0.73% TOTAL 70,819 78,545 85,021 89,237 92,567 95,641 0.99% Amalia 7,552 8,094 9,021 9,703 10,286 10,851 1.48% Glaudina 2,381 2,530 2,775 2,956 3,107 3,256 1.27% Schweizer-Reneke 3,241 3,344 3,511 3,629 3,725 3,817 0.66% Schweizer-Reneke 636 672 733 777 815 850 1.18% outlying HIGH SCENARIO Charon/Ipelegeng 41,472 50,805 58,128 63,660 68,463 73,211 1.84% and extensions Migdol 5,071 5,358 5,846 6,200 6,499 6,787 1.19% Mamusa farms 10,465 10,112 9,690 9,466 9,418 9,363 -0.38% TOTAL 70,819 80,916 89,703 96,391 102,313 108,135 1.46%

The high growth scenario population of Schweizer-Reneke is 77,028 persons in 2030.

Table 6. Future projected population of Schweizer-Reneke11 Growth pa Scenario 2007 2010 2015 2020 2025 2030 (2010- 2030)

Schweizer-Reneke/Rosunville Low 44,713 52,028 57,725 61,451 64,319 66,987 1.27% Ipelegeng/Charon High 44,713 54,149 61,639 67,289 72,188 77,028 1.78%

10 Kayamandi Development services (PTY) Ltd, Bulk water Supply to the Greater Mamusa Area, Population Investigation memorandum, December 2009, P12. 11 Kayamandi Development services (PTY) Ltd, Bulk water Supply to the Greater Mamusa Area, Population Investigation memorandum, December 2009, P12.

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Population Lekwa-Teemane

The population of Bloemhof was estimated at approximately 30,000 in 2010. The growth rate projected for the population between 2008 and 2030 ranges from 0.33% in the low growth scenario to 1.25% in the high growth scenario. This implies that by 2030, the population could reach over 35,000 people.

Table 7. The population of Bloemhof12 Population 2008 2010 2015 2020 2025 2030 Low Scenario 27,712 29,073 30,828 32,118 32,928 33,466 High Scenario 27,712 29,229 31,395 33,121 34,374 35,357 % Growth/pa 2.46 1.21 0.84 0.5 0.33

The number of households in Bloemhof2010 was 8,162in 2010, which are estimated to reach 8,623 by 2030.

3.1.2 Household composition

Household composition and the gender of the household head, in particular, are associated to socio- economic conditions. For example, the percentage of children that go hungry was substantially higher in female-headed households (3.4%) than in male-headed households (1.6%).13 Furthermore, it is common to find that female-headed households (11.5%) are more likely to receive a housing subsidy than male-headed households (8.2%) are.14

In 2001, 38% of the North West households were headed by females and by 2007; it had reduced to 35%. In 2007, the rates in Mamusa (39%) and Lekwa-Teemane (44%) are higher than the provincial average.

Figure 3. Percentage female headed households15

12 DWA. Reconciliation strategy of the Bloemhof town area in Lekwa-Teemane local municipality in the Lower Vaal WMA, June 2010. 13 http://www.statssa.gov.za/news_archive/23August2007_1.asp Downloaded 17 February 2010. 14 StatsSA. General Household Survey 2009. P0318. 15 StatsSA. Census 2001 and Community Survey 2007.

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The male-female ratios are not skewed in the study area. Mamusa has a slight predominance of females at 51.5% as does Lekwa-Teemane at 51.8%.16

Average household size in the North West province has remained at 3.7 persons per household in 2001 and 2007. Mamusa‟s average household size was 3.5 persons per household in 2007. However, according to the Kayamandi Report the average household size in the Mamusa Municipality is 4.75 persons per household.

The average household size of Lekwa-Teemane is 3.3 persons per household, although in Bloemhof it is estimated at 4.1 persons per household.

3.1.3 Housing conditions

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 and it is thus relevant to forecast the new number of housing units to be constructed and make an estimate of the backlog.

On average 23.8% of the North West‟s households live in informal dwellings. This is higher than the South African average at 14.5%.17 In Lekwa-Teemane 23% of households lived in an informal dwelling in 2007 compared to 18% of households in Mamusa.

Table 8. Type of main dwelling18 Type of housing Mamusa Lekwa-Teemane House or brick structure on a separate stand or yard 7,295 70% 6,803 68% Traditional dwelling/hut/structure made of traditional materials 273 3% 196 2% Flat in block of flats 112 1% 108 1% Town/cluster/semi-detached house (simplex: duplex: triplex) 95 1% 93 1% House/flat/room in back yard 642 6% 165 2% Informal dwelling/shack in back yard 668 6% 386 4% Informal dwelling/shack NOT in back yard e.g. in an 1,282 12% 1,933 19% informal/squatter settlement Room/flatlet not in back yard but on a shared property 33 0% 95 1% Caravan or tent 0 0% 39 0% Private ship/boat 0 0% 0 0% Workers hostel(bed/room) 31 0% 128 1% Other 0 0% 6 0% Total 10,431 100% 9,952 100%

16 Statistics South Africa (2007) Community Survey. 17 StatsSA. Community Survey 2007 – North West (03-01-28). P 12. 18 Statistics South Africa, Community Survey 2007

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Almost 50% of the North West households own their own homes and 45% of these homes are fully paid off. In the study area, the percentage houses owned and fully paid all is higher at 58% in Mamusa and 52% in Lekwa-Teemane.

Table 9. Dwelling ownership19 Tenure status Mamusa Lekwa-Teemane Owned and fully paid off 6,091 58% 5,138 52% Owned but not yet paid off 1,187 11% 1,213 12% Rented 1,134 11% 1,584 16% Occupied rent-free 2,016 19% 1,978 20% Other 0 0% 39 0% Unspecified 0 0% 0 0% Total 10,428 100% 9,952 100%

3.1.4 Migration

Several patterns have been observed in both municipalities. The first pattern is that previously disadvantaged residential areas such as Ipelegeng are experiencing rapid growth characterized mainly by low cost housing.

A second pattern is that the farming area is depopulating at a relatively high rate with continuous movement from the farm areas to the urban areas. The rural population is rapidly urbanising, contributing to rapid growth of Schweizer-Reneke and Bloemhof, which are the main towns of Mamusa and Lekwa-Teemane municipalities respectively. These towns offer higher levels of service, such as health and education than the surrounding smaller settlements, which make them more attractive. Push factors include declining farm incomes, closure of small mines and associated labour retrenchment, which affects migration rates.

3.2 BASIC AND HIGHER SERVICE LEVELS Although progress has been made in eradicating the use of bucket toilets, it is found that once buckets are eliminated in a community, newly formed communities start using buckets for lack of an alternative.

19 Statistics South Africa, Community Survey 2007

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The DRSMDM has a list of informal households with no VIP toilets:20

 Glaudia 220 households

 Amalia 267 households

 Migdol 236 households

The table below shows that basic services levels have been met in Schweizer-Reneke, Rosunville, Ipelegeng, and Charon.

Ext 7,8,9 Mareesin Ext 6 being farm developed Charon to be relocated

Relocation of other spots

Scattered buckets (200)

Ipelegeng: Yard connections and WB sanitation

Table 10. Map of Ipelegeng, Schweizer-Reneke indicating levels of water and sanitation and areas of future development

20 Mosedgedi and Associates. Mamusa eradication of basic sanitation backlogs. No date.

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Table 11. Water and sanitation level of service in the Mamusa Municipality Water supply Sanitation 350 yard connections VIPs Amalia 52 communal standpipes 267 HH without 50 own boreholes Septic tanks Communal standpipes VIPs and 220 HH without Glaudina 50 own boreholes Septic tanks 500 yard connections VIPs Migdol 2 communal standpipes 236 HH without 50 own boreholes Septic tanks Schweizer-Reneke/Rosunville Metered yard connections Waterborne sewers Metered yard connections Waterborne sewers Ipelegeng/Charon Ipelegeng Ext3 communal standpipes VIPs Mareesin Farm Township Still to be serviced (4,000HH) To be serviced Nooitgedacht Still to be serviced (500HH) with yard connections To be serviced with VIPs

In Lekwa-Teemane all backlog to at least basic level of service have been met.21 All areas in Bloemhof have metered yard connections and waterborne sewerage except for parts of Boitumelomg Proper and Ext 1, which are serviced with communal standpipes. These are to be upgraded to yard connections and waterborne sewerage.

3.3 NUMBER OF POOR HOUSEHOLDS TO BE SERVED 3.3.1 Household income distribution

In 2001, 63% of Mamusa and 55% of Lekwa-Teemane households had an income of less than R9,600 p.a. In 2001, 24% of Mamusa and 20% of Lekwa-Teemane households reported having no income.

Table 12. Household income per annum 200122 Household income Mamusa Lekwa-Teemane No income 2,596 24% 2266 20% R1 - R4 800 1,497 14% 1469 13% R4 801 - R 9 600 2,726 25% 2643 23% R9 601 - R 19 200 1,900 18% 2419 21% R19 201 - R 38 400 1,031 10% 1457 13% R38 401 - R 76 800 542 5% 733 6% R76 801 - R153 600 279 3% 389 3% R153 601 - R307 200 105 1% 131 1% R307 201 - R614 400 24 0% 30 0%

21 Mr JB Sparks, IDP Manager, Lekwa-Teemane Municipality, 11 January 2012. 22 Statistics South Africa, 2001 Census

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Household income Mamusa Lekwa-Teemane R614 401 - R1 228 800 12 0% 12 0% R1 228 801 - R2 457 600 22 0% 7 0% R2 457 601 and more 10 0% 8 0% Not applicable (institutions) 6 0% 13 0% TOTAL 10,750 100% 11577 100%

People in the area are thus poor and cannot afford expensive services and infrastructure.

3.3.2 Multi-deprivation indicator

Extreme rural poverty and deprivation exists in several pockets of the North West Province and in particular in the districts of Dr Ruth Mompati and Ngaka Modiri Molema. The most deprived municipalities are Greater Taung and Ratlou. Mamusa ranks third highest in terms of deprivation, while Lekwa-Teemane is closer to the average of the North West Province.

Figure 4. North West index of multiple deprivation 200123

23 http://www.statssa.gov.za/census01/html/PMID/NWRoads.pdf (Accessed: 2010-07-07)

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3.3.3 Social grants

South Africa's social security system, a major monthly income source, has played an increasingly important role in reducing poverty and inequality. In 2009, over one million people in the North West received a social assistance grant (1,020,906), which represents 29.6% of the total population. Thus, almost one in every three people received a grant. 24 This has increased from 132,732 grant beneficiaries in 1996.25

Figure 5. Social grant recipients in Mamusa and Lekwa-Teemane 200726 Social grants are an instrument use to reduce poverty successfully in South Africa. It is estimated that social grants reduce poverty by 67% when the destitution line is used as the benchmark.27 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 2007 Community Survey, the number of persons receiving grants in Mamusa Municipality was 10,788 with almost the same amount receiving grants and Lekwa-Teemane at 10,663. The proportion of people receiving grants is 30% and 32%, respectively. Almost one in every three people thus received a grant. Child grants account for the highest number followed by old age and disability grants.

24 Social grants making an impact. Michael Appel. 7 April 2008. http://www.southafrica.info/about/social/ies- 060308.htm. Downloaded 2 Oct 2008. 25 Office of the Premier, North West Province. 2009. North West Provincial Government comprehensive handover. April 2009. http://www.nwpg.gov.za/Premiers/Office%20of%20the%20premier/Comprehensive%20Provincial%20handover.p df (Accessed: 2010-07-05) 26 StatsSA, Community Survey 2007 27 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.

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Table 13. Number of persons receiving grants 28 Social grant recipients Mamusa Lekwa-Teemane Not Applicable 25,742 70% 22,149 68% Old age pension 1,862 5% 2,664 8% Disability grant 1,270 3% 1,322 4% Child support grant 6,821 19% 5,699 17% Care dependency grant 54 0% 173 1% Foster care grant 0 0% 26 0% Grant in aid 49 0% 176 1% Social relief 0 0% 180 1% Multiple social grants 491 1% 30 0% Institutions 241 1% 393 1% Total 36,530 100% 32,812 100% Total grants 10,788 30% 10,663 32%

3.3.4 Indigent

Indigent policy

Households with an income lower than R2,240 (two state pensions) qualify as an indigent household in Mamusa and lower than R2,800 pm in Lekwa-Teemane. This is also the amount used when applying for the equitable share.

Indigent households qualify for 6 kℓ free basic water in Mamusa and 9 kℓ in Lekwa-Teemane (refer to Annexure L)

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 Statistics SA is used. Even though the 2001 Census data may be construed to be out-dated, the latest 2011 Census data has yet to be published. National Treasury supplies grant finances from the equitable share for the indigent households as determined by the

28 Source: StatsSA

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latest Census statistics.29 Thus, for municipal equitable share allocations, the 2001 Census data is used,30 until the 2011 Census results become available.

The Census 2001 data source is thus 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.

Furthermore, the number of registered indigent households can vary greatly from year to year, often depending on whether a campaign to register indigent households has been undertaken. For example, there are 1,655 people registered as indigents in the Mamusa Municipality, according to a municipal source31. Indigents have to register annually and unfortunately, not all households register because households receive free basic services, regardless of registering as indigents. However, after a free basic services campaign to register indigent households in Mamusa, the maximum number that was registered in Mamusa was 4,159 indigent households, although not all areas were covered by the campaign. Thus, the proportion of indigent households in the study area is determined based on the 2001 Census.

An indigent household in Mamusa is defined as a household with a monthly income equivalent or less than two state old age pensions.32 In 2001, the value of two old age pensions was R1,140 per month or R13,680 per annum. Approximately 76% of the households in the category are assumed have a household income of ≤ R13,681 pa. Thus, 76% of the households in Schweizer-Reneke had incomes of ≤R13,681 pa and could therefore be regarded as indigent households.

29 Development of Models to Facilitate the Provision of Free Basic Water in Rural Areas, Report No 1379/1/05: March 2005. [Online] Available from: http://www.fwr.org/wrcsa/1379105.htm (Accessed: 9 June 2012). 30 Parliamentary Monitoring Group. Division of Revenue Bill: Consideration of negotiating mandates: Appropriations. Date of Meeting: 16 Mar 2010. [Online] Available from: http://www.pmg.org.za/report/20100317- division-revenue-bill-consideration-negotiating-mandates (Accessed: 9 June 2012). 31 Personal communication with Mrs Annatjie Barkhuizen on 27 October 2011. 32 Mamusa Municipality. Indigent policy.

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Table 14. Household income distribution per annum 200133 34 Mamusa 2001 HH % No income 2,596 24% R1 - R4 800 1,497 14% R4 801 - R 9 600 2,726 25% R9 601 - R 13 680 1,330 12% R13 681 + 2,601 24% TOTAL 10,750 100% HH with income R13 680 and below 8,149 76%

In Lekwa-Teemane an indigent household is defined as a household with a monthly income equivalent or less than R2 800 in 201/2012. 35 In Lekwa-Teemane, all metered domestic consumers receive 9kl free water. In addition, the basic and availability charge for indigent customers is subsidised in full by the council.36 In 2001, the value of R2,800 pm (2011) was R1,657 per month or R19,883 per annum applying the CPI of Statistics South Africa. Approximately 76% of the households in the category are assumed have a household income of ≤ R19 883 pa in 2001. Thus, 76% of the households in Bloemhof had incomes of ≤R19 883 pa and could therefore be regarded as indigent households in 2010 too.

Table 15. Household income distribution per annum 200137 Lekwa-Teemane HH Cumulative % No income 2,266 19.6% R1 - R4 800 1,469 32.3% R4 801 - R 9 600 2,643 55.1% R9 601 - R 19 200 2,419 76.0% R19 201 - R 19 883 1,457 76.2% >R19 883 1,313 100% Total 11,564

33 It is assumed that 70% of the households in the income bracket R9600-R19200 have a household income of less than or equal to R13,680 p.a. 34 Derived from StatsSA, Census 2001 35 Lekwa-Teemane council resolution 12 May 2011 (Annual Budget approved). 36 Lekwa-Teemane Municipality. Free basic policy and indigent support policy. 37 Derived from StatsSA, Census 2001

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3.4 ESTIMATED NUMBER OF JOBS TO BE CREATED Job creation during construction is discussed below.

3.4.1 DWA in-house construction standards

In terms of the DWA in-house construction standards, most of the personnel are employed in terms of Section 76 of the NATIONAL WATER ACT (Act 36 of 1998). These unique conditions of service have been approved by the director-general in consultation with the Unions, DPSA and Chief Directorate Construction Management.

Estimates for the various contractual appointments are:

 Core staff appointed on standard contract (21.0%)

 Local staff appointed on project based contract (74.5%)

 Some engineers and technicians appointed on specialist contracts (1.1%)

 Other contract employees e.g. casuals (3.4%)

3.4.2 Jobs created

Temporary job creation opportunities are created on most construction projects. To estimate the number of construction opportunities for local employment, norms were obtained from various large bulk water projects. For example, at the De Hoop Dam, which is being constructed by DWA in-house 726 temporary jobs are available every month on average. The number of temporary jobs peaked in May 2011 with 1,179 jobs. Over 52 months 25,080 person days of work was created. Thus, for every million Rand invested, up to October 2011, 0.479 temporary jobs were created.

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Table 16. Temporary job creation opportunities38 39

Total Temporary Investment temporary Person jobs per Project in R Million employment days Million opportunities investment Pilansberg water scheme R1,200 710 0.592 Wallmannsthal Cullinan Bulk Water Infrastructure R116 95 0.819 Klipdrift Bulk Water Infrastructure R79 75 0.949 Regional Bulk Programme 2010/2011 R869 1,313 1.511 Ntenetyana Dam raising dam wall and pipeline R421 149 0.354 De Hoop Dam40 R1,515 726 847,044 0.479 Total nationally 2007/08-2009/10 R1,362 3,448 188,825 2.532 Mamusa R360 225,082 193

Assuming that the same targets can be reached on the Mamusa bulk water project as on the De Hoop dam project, it implies that an investment of R360 million can create 225,082 person days of temporary employment. If this is achieved over a construction period of 365 days for example, it implies that 617 people are employed temporarily daily for the year.

3.5 AFFORDABILITY OF THE PROPOSED WATER TARIFFS Typically, a household can afford to pay up to 5% of household budget on water and sanitation according to international standards. Affordability calculations for water are made based on 2% of household budget for the study area.

If a typical indigent household of 4.75 persons uses at least 80 litres per capita per day, the monthly consumption is 11.4 kℓ. After the subsidisation of the free basic water amount of 9 kℓ in Lekwa- Teemane and 6 kℓ in Mamusa, households would have to pay R17.76 and R46.01 respectively. Discounting the monthly income in 2010 to 2001 determines the percentage of households that would have had an income of R16 333 pa (Mamusa) and R6 306 pa (Lekwa-Teemane) which represents the minimum household income required to afford 2% of income for water. Thus, approximately 66.5% of households in Mamusa and 35.9% of households in Lekwa-Teemane would not be able to allocate

38 Magalies Water (2011) Bulk water supply infrastructure augmentation schemes – Implementation. Crocodile West Reconciliation Strategy Steering Committee. Presentation 29 September 2011. 39 Department of Water Affairs. Annual report 1 April 2010 to 31 March 2011. P28. 40 Data kindly supplied by Mr Paul Kruger of the DWA enhanced construction unit. December 2011.

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2% of household income to the cost of 80 litres of water per person per day on average. The reason for the difference between Mamusa and Lekwa-Teemane is that Lekwa-Teemane allocates 9 kℓ FBW while Mamusa only allocates 6 kℓ per household. Households larger than 4.75 people or households using more than 11.4 kℓ per month would be less able to afford this cost.

Table 17. Assumptions and calculations of water affordability 2010/201141 Mamusa Lekwa-Teemane Tariff per kl R8.52 R7.40 Kl free 6 9 Basic charge R33.40 R20.18 Typical household consumption in kl (4.75 persons at 80l per capita p.d.) 11.4 11.4 Thus: Amount payable above the FBW (ex-basic charge) R46.01 R17.76 At 2% of income then monthly household income is at least R2,300.40 R888.00 HH income pa 2001 R16,333 R6,306 % HH with income less than R# pm 66.5% 35.9%

However, the affordability of water is a theoretical debate. At present water meters are not read in Ipelegeng even though electrical flow meters have been installed at 2,371 stands and therefore consumers are not charged for water. Because of this, average household water consumption is also unknown.

Between 2006/2007 and 2007/2008 financial year water tariffs escalated sharply from R1.98 to R6 per kℓ in Mamusa. In addition, domestic water tariffs are higher than that applied for businesses, which should be addressed because businesses should be in a position to pay at least the same if not a higher price for water.

For industries and businesses the cost of water is usually a small percentage of the total cost of production. Even industries that use large quantities of water, the cost of water is minimal in comparison to other production inputs, such as labour, energy, capital and raw materials utilised. Thus, decisions of locality, technologies used, and scale of operations are more important than that of effective water utilization.

The economic value of water for industrial usage is usually calculated by using the so-called second best cost alternative i.e. the cost to recirculate water within the production process. Therefore,

41 Derived from StatsSA CPI index and Census 2001

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industry will normally only be willing to pay for new water supply equal to the cost to produce water of adequate quantity through treatment and reuse.42

3.6 NUMBER OF ASSOCIATED SERVICES BENEFITING Associated services such as schools, clinics and hospital will be provided with water through the reticulation systems of the municipalities.

3.6.1 Health facilities

There are two hospitals in the study area namely Schweizer-Reneke hospital with 68 beds and the Bloemhof Community Health Centre (CHC) with 17 beds.

The table below lists the primary health care facilities in Mamusa and Lekwa-Teemane and the hours of operation of each facility. The Mamusa Community Health Centre needs an upgraded water supply.

Table 18. Clinics and CHCs with the hours of operation per district43

Type of HRS OF CLINIC

facility SERVICE DISTRICT

Ipelegeng Clinic 12

Schweizer-Reneke Town Clinic 8 Sharon Youth Centre Clinic 8 Amalia Clinic 12 Mamusa Mobile Clinic 8 Mamusa CHC CHC 24 Christiana Town Clinic 8

Utlwanang Clinic 8 Geluksoord Clinic 8 Bloemhof Town Clinic 8

Boitumelong Clinic 24 Teemane - Coverdale Clinic 8 Christiana Community

Lekwa hospital CHC 24 Bloemhof Community hospital CHC 24

42 Gibbons cited in Conningarth Economists (2007) A manual for cost benefit analysis in South Africa with specific reference to water resource development. 2nd Edition. Water Research Commission. TT 305/07.P.110. 43 Northwest Department of Health. Service transformation plan, 2011.

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The leading cause of death in the Province is tuberculosis, followed by influenza and pneumonia. 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. Assuming that the population of Schweizer-Reneke and Bloemhof use these facilities on average 3.5 times per annum44, an estimated 40,208 and 102,301 visits are made to the respective primary health care facilities per annum.

3.6.2 Schools and crèches

There are 11 schools in Schweizer-Reneke, which all have water connections. An estimated 13,840 learners attend these schools with a further 250 lodging at boarding schools. Another 48 crèches are located in Schweizer-Reneke. 15 Bloemhof has nine primary and secondary schools and a further five crèches. Approximately 10,850 learners attend these nine schools.

3.6.3 Community halls

There are four community halls in Schweizer-Reneke that each have approximately 400 seats. Bloemhof has three community halls namely Boitumelong (200 seats), Coverdale (100 seats) and Bloemhof (400 seats).

3.7 SOCIO-POLITICAL SUPPORT FOR THE PROPOSED DEVELOPMENT 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.45

3.7.1 Mamusa

Support and priorities

Support for the bulk water project is expressed in 2010/2011 Mamusa IDP. In addition, water is the highest priority issue in Mamusa. The bulk water project is also supported in Dr Ruth Segomotsi Mompati 2010/2010 Top Layer Delivery Budget and Implementation Plan.

44 This is the target set by the Department of Health for the number of visits on average per person to a primary health care facility per annum. 45 Dept. of Water Affairs (2011) Water services regional bulk infrastructure programme – Framework for implementation. Version V10, January 2011.P. 19.

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Water supply is the first priority in the Mamusa IDP. 46 The priorities identified in the IDP process were:

1. Water 2. Roads 3. Electricity 4. Housing 5. Land

Social amenities

The Municipality states that they have a number of sector plans available e.g.:47

 Spatial development framework

 Land use management scheme

 Disaster management plan

 Integrated water management plan

 Plan for the development of LED strategy

 Workplace skills plan

 Employment equity plan

According to the IDP, challenges in the Municipality include: 48

 Lack of land for development

 Lack of adequate baseline information

 Insufficient investment for job creation

 Lack of adequate skills in developmental areas

 Low economic potential and high dependence on agriculture

46 Mamusa Local Municipality. Draft operating and capital budget for the MTEF 2010/2011 to 2012/2013. Mayoral Presentation, 25 June 2010. 47 Mamusa Local Municipality. Final IDP reviewed document 2010-2011. P.9. 48 Mamusa Local Municipality. Final IDP reviewed document 2010-2011. P.9.

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Figure 6. Water priorities in the Mamusa IDP 2010/201149

Water services projects

Numerous water projects were noted in the Mamusa IDP, which included:  Bulk water project: Feasibility complete. Budget R10 million for design.

 Water treatment plant maintenance to improve water quality funded by the DM at R2 million

 Provide house connections in Molatswaneng to reduce waste: No budget.

 Request DM funds to upgrade Wenzel Dam

 Repair old and bypassed water meters: To be funded by the DM at R150,000

Sanitation projects included:

 Eradicate 250 buckets Ipelegeng: R2,5 million DM to fund

 Repair 300 incorrect connections in Ext 5

 Construct oxidation dams in Migdol, Glaudina and Amalia at R1,5 million each funded by the DM

49 Mamusa Local Municipality. Draft operating and capital budget for the MTEF 2010/2011 to 2012/2013. Mayoral Presentation, 25 June 2010.

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 Install siphon system in sewer network for sewer back flushing costing R1.5 million DM

 Construct 200 VIPs in Nooitgedacht

Water issues

The higher lying areas of the Schweizer-Reneke town, namely Extension 4, 5, 6 and New Town/Bo- Dorp suffer continuous low water pressure, with the result that these residents often receive water only between midnight and 6 am. Complaints have been received by the municipality from both residents and councillors. In the past two years, community marches by residents of Extension 4, 5, and 6 have taken place, which has also been reported in the news.

Problems at the water purification works require that residents use water sparingly. A notice to this effect was issued by the Mamusa Municipality on 16 November 2011.

During drought episodes, the Wentzel Dam has become empty and the last time that this occurred was in 1983.

Although no major industries are reliant on water is a major component of the production process, this is a major inhibitor for attracting and establishing businesses in Schweizer-Reneke. It is perceived that Bloemhof, Vryburg and Wolmaransstad have competitive advantages because of its reliable water resources. Previously the town lost the establishment of a Coca-Cola depot because the water supply could not be guaranteed.

As a result, schools are larger water consumers than industry in Schweizer-Reneke.

Housing projects

The status of housing projects reported in the Mamusa IDP is:

 Complete 500 units in Ipelegeng Ext 6

 Construct 200 units in Nooitgedacht (R17m)

 Apply for 700 units Migdol

 Apply 300 units Glaudina

It is recorded in the Mamusa IDP that there are approximately 5,000 households on the housing waiting list.

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3.7.2 Lekwa-Teemane

Water services projects

The Lekwa-Teemane IDP‟s first priority is the upgrading of the water purification and abstraction point because the purification plants at both Bloemhof and Christiana currently run at 100% percent capacity.50

Bulk water supplied to Extension 5 Boitumelong in Bloemhof has been implemented at a cost of R4, 6 million.

Buckets have been eradicated in Boitumelong and Coverdale. The sewage treatment works in Bloemhof has been upgraded at a cost of R20 million. There are no basic sanitation backlogs.

Sewer networks need to be upgraded in both Bloemhof and Christiana, which is the third priority in the Lekwa-Teemane IDP. 51

Housing projects

The second priority in the Lekwa-Teemane IDP is to address the housing backlog, which amounts to approximately 5500 households in Bloemhof and Christiana. 52

3.8 DETERMINING THE SOCIAL COMPONENT 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:53

 Basic level of domestic use

 Associated social requirements e.g. schools and clinics

 Social economic development objectives (enablement of economic development)

50 Lekwa-Teemane IDP draft 2011-2016. P. 45. 51 Lekwa-Teemane IDP draft 2011-2016. P. 45. 52 Lekwa-Teemane IDP draft 2011-2016. P. 45. 53 Department of Water Affairs and DFID. (2008) Funding agency booklet. April 2008. P.8.

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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.54 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”. 55

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.56

Source: 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.

Aspects that were confirmed of Method 1 described in the figure above are: 57

 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.

54 Blazer, P. (2010) Regional bulk infrastructure grant (RBIG) programme. Presentation to the Portfolio Committee: Water and Environment on 16-17 March 2010. P.6. 55 Department of Water Affairs. Strategic Plan 2010/11-2012/13. P.7. 56 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. 57 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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 “existing total demand” is assumed to mean the total water demand in 2010 e.g. from all water sources or total works in the case of a water treatment plant. In this case it includes the current water supplies from the Wentzel dam and the boreholes AND the water to be delivered by the intended pipeline. If the water treatment works are to be expanded, then the whole works is used in the calculation, not only the additional new works.

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

 Method 2 and Method 3 do not seem to apply to this case. 58 It is advised that the method used be based on the circumstances of the project for example: 59

 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.

3.8.2 The Mamusa project

The preferred scenario of this project is to augment water from the Vaal River to that of the Wentzel dam and boreholes for the water supply of Schweizer-Reneke. Water is to be abstracted from Bloemhof Dam and conveyed to Bloemhof WTW. Potable water is to be piped along the Bloemhof/Schweizer-Reneke road (58.5 km) to existing and proposed reservoirs. New abstraction works and water treatment works to increase water treatment capacity at Bloemhof is required.

The pipeline is due to deliver 1.721 million m3 of water per annum in 2030, which represents 37.5% of the total water supply (4.587 million m3/annum) at Schweizer-Reneke. The remainder is supplemented by water from boreholes and the Wentzel Dam. In 2010, the water demand was 3.454 million m3/annum. This includes 15% network distribution losses and 10% water treatment losses.

The total demand used in the social component calculation is based on the average annual daily demand (AADD) projected to 2030, which is 3.42 million m3/annum. The AADD is based on 80ℓ/c/d for

58 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. 59 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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Ipelegeng and Charon, 292 ℓ/c/d for Schweizer-Reneke and Rosunville to which business/industrial demand is added. The water treatment works is designed to deliver 22 Mℓ/d 2030. This equates to an additional 12.3 Mℓ per day or 4.49 million m3/annum. The current plant has a capacity of 9.7 Mℓ per day. This design is based on a total AADD of 6 306 million m3 per annum required for Bloemhof and Schweizer-Reneke.

The capacity of the water supply system is summarised in the table below.

Table 19. Average annual daily demand (AADD) of the proposed project

Category 2030 AADD = 3.42 million m3/annum Water demand of The pipeline is to deliver 1.721 million m3 pa, supplemented by boreholes and Schweizer-Reneke Wentzel Dam to meet the gross annual demand of 4.587 million m³ at Schweizer- Reneke. AADD = 6.306 million m3/annum Water treatment works Design demand =22 Mℓ/d of which 9.7 Mℓ/d is exiting works. Thus additional works (and abstraction works) 3 =12.3 Mℓ/d or 4.49 million m /annum.

3.8.3 Norms used

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 20. Norms used in the water allocation per category

Category Water use per day in litres Source Comment Specified in Indigents 80 per capita the RBIG Schools (day) 20 per learner Red Book60 Schools (boarding) 140 per learner Red Book Hospitals 300 per bed Red Book Based on 3.5 visits per person to a clinic per Clinics 5 per outpatient visit Red Book annum which is the target of the Dept. of Health Assumed use of community halls is twice per Community halls 90 per seat Red Book week Assumed to be the same as learners at Crèches 20 per leaner schools

60 CSRI Building and Construction Technology (2000) Guideline for human settlement planning and design. Volume 2. P.21.

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3.8.4 Social component for the Mamusa 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 and projected to 2030.

Table 21. Calculation of the social component Population Water use Water use Supply in Population % social Schweizer-Reneke / users per day in in million million m3 / users component 2030 litres m3 pa pa 2030 Indigent HH SR (76%) 58,541 80 1.709 3.420 50.0% Schools (day) learners 13,840 23,086 20 0.169 3.420 4.9% Schools (boarding) 250 356 140 0.018 3.420 0.5% Hospital beds 68 97 300 0.011 3.420 0.3% Clinic outpatients 189,522 269,716 5 0.001 3.420 0.0% Community hall seats 1,600 2,277 90 0.021 3.420 0.6% Crèche learners 334 475 20 0.003 3.420 0.1% Subtotal pipeline social component 56.5% Indigents Bloemhof and SR Indigent HH Bloemhof (76%) 26,871 80 0.785 6.306 12.4% Indigents Bloemhof + Schweizer-Reneke 85,412 80 2.494 6.306 39.6% Associated water users Bloemhof Schools (day) learners 10,850 13,135 20 0.096 6.306 1.5% Schools (boarding) leaners 0 0 140 0.000 6.306 0.0% Hospital beds 17 21 300 0.002 6.306 0.0% Clinic outpatients 102,302 123,842 5 0.001 6.306 0.0% Community hall seats 700 847 90 0.008 6.306 0.1% Crèche learners 400 484 20 0.004 6.306 0.1% Subtotal Ass Bloemhof 1.7% Subtotal Ass Schweizer-Reneke 0.223 6.306 3.5% SUBTOTAL WTW and water abstraction 44.8% social component Social component of the project 50.5%

The portion of the pipeline that delivers water to the social component is 56.5% while the portion of the water treatment and abstraction works is 44.8%. The weighted average for the project is 50.5%.

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4 ECONOMIC CRITERIA

An aspect that needs to be addressed for the Mamusa IRS is the economic criteria, which is set out in this section. According to the TOR61, economic aspects that need to be addressed are:

 Number of current businesses and industries to be served by type and water use category

 Expected economic value to be generated by businesses as a result of the project

 Number of SMME and BEE enterprises to benefit both during the project and as an indirect result of the project

 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 BUSINESS AND INDUSTRIES TO BE SERVED The profile of the businesses and industries in Bloemhof and Schweizer-Reneke are that of a small rural town.

The Mamusa area has no large firms or industries. Farming is the mainstay of the local economy although several agro-processing industries have closed down such as:62

 Groundnut factory, which was a major employer

 Maize mill

61 Water Services. Terms of reference: Feasibility study and implementation ready study for the regional bulk infrastructure grant programme (RBIG). January 2011. Page 18. 62 Mamusa Local Municipality. Mamusa Economic Development Initiative. Undated. P.3. Special Council meeting 25 June 2010.

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 Sunflower factory

Economic opportunities identified in the Mamusa IDP include factories established by the local agricultural co-op, development of a park and vacant stands for middle-income housing, revamping Wentzel Dam resort and establishment of Groundnut International, which is already operating with 100 employees.

According to the Mamusa LED strategy, informal businesses are likely to be established in backyards thus requiring water and sanitation.

The main industrial water user in Bloemhof is the cheese factory. However, the factory has installed its own boreholes as a back-up system. A small abattoir in also located in Bloemhof.

Opportunities identified in the Lekwa-Teemane IDP:

 Hydroponic project for Boitumelong

 Tirisano Art Centre for Boitumelong

 Broiler project

 Utlwanang beef production

 Afro-leather for Utlwanang

4.2 EXPECTED ECONOMIC VALUE TO BE GENERATED BY NEW BUSINESS 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) to the direct effects of a specific activity or a change in some activity. Therefore, a multiplier of 1.6 indicates that for every R1 spent (direct expenditure) an additional R0.6 is generated within the economy. 63

Types of multipliers include input, output, income and employment multipliers. Income and employment multipliers are interpreted in the same way, i.e. they show the total increase (decrease) in income or employment given an increase (decrease) of one unit of output of each industry.

63 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.

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Multipliers are often used to illustrate the significance of an industry or activity in the overall economy. However, multipliers are often presented as evidence to motivate taxpayer-funded projects and thus the multipliers must be used with caution. 64

Economic multipliers can be used to estimate the possible macro-economic impacts of simulated 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. 65 Using the average multiplier for an industry may therefore overestimate or underestimate the real impact on a specific industry66.

Although multipliers are typically used to measure the impact of development activity, job and income losses can be estimated because of production closure or no expansion due to limitations such as water provision. It should be noted that multipliers are higher for projects located in large urban areas, because smaller rural areas require greater amount of supplies from outside the area.67

Multipliers should only be applied to projects that are a source of net new economic activity in an area. For example, the construction and operation of the pipeline and its related infrastructure are net new activities.

Economic impact is determined based on the capital and operational and maintenance costs of the pipeline and its related infrastructure detailed in the table below.

Table 22. Operation and maintenance costs68 Capital cost of project Capital cost in R million O&M p.a. in R million Scenario 1 R 402.7 R 1.489 Scenario 2 R 237.5 Scenario 3 R 336.9

64 Layman (2000 cited in Taljaard et al, 2008). P 21. 65 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. 66 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. 67 Bureau of Economic Analysis (2009) Using multipliers to measure economic impact. Regional Input-Output Modelling System (RIMS II). [Online]. Available from: http://www.labor.ca.gov/panel/pdf/Using_Multipliers_to_Measure_Economic_Impacts.pdf (Accessed: 5 October 2011). 68 ?

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

 Direct: attributable to the bulk regional project‟s direct investment in construction, operations and water lease payments

 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

4.2.1 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 table below depicts the labour multipliers calculated for the economic activities in the South African economy. 69 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.

Figure 7. Labour multipliers70

69 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. 70 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.

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Considering the electricity, water and gas industry norms of 1.7 direct, 3.5 indirect and 5.9 induced jobs, the following labour estimates are made for the operation and maintenance of the project. Thus in terms of expected direct employment, it is estimated that Option 1 creates three direct jobs, five indirect jobs and nine induced jobs.

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.71

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. 72

Figure 8. Employment based on labour multipliers of the electricity, water and gas sector applied to the operation and maintenance phase of the project 4.2.2 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

71 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. 72 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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the sum of the intermediate inputs plus the total value added by a specific sector. 73 The production multipliers (i.e. direct, indirect and induced effects) for economic activities are shown in the table figure below.

Figure 9. Production multipliers74 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 R 4.140.

73 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. 74 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 10. Estimated production multipliers of the operation and maintenance phase of the project (Scenario one) 4.2.3 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. 75 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 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 1.285. 76

75 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. 76 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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Figure 11. Val ue added multipliers77 Value-added multipliers calculated for the economic activities are shown in the figure below. In terms of electricity, water and gas activities, on average R360,000 worth of value is added to every R1 million of sectoral activity. Given an induced effect of R360,000 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. Thus on an O&M expenditure of R1,489 million per annum, there should be a direct value added effect of R0,745 million, indirect effect of R0,536 million and an induced effect of R0,581 million.

Figure 12. Value added per R1 million , water, gas and electricity spending

77 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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4.2.4 Effects of investment in water infrastructure

The Financial and Fiscal Commission 78 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.  Employment generally falls due to the reduction in the overall price of capital.

Table 23. Macroeconomic effects of a 10% increase in water infrastructure79 Variable Variation (%) Price index -0.02 Import 0.01 Export 0.00 Unemployment rate*80 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

78 Financial and Fiscal Commission. 2010. Technical report: Annual submission on the division of revenue 2010/2011. 79 Financial and Fiscal Commission. 2010. Technical report: Annual submission on the division of revenue 2010/2011. Page 35 Table 14. 80 Variations computed as percent changes *except for unemployment expressed as percentage point change.

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Variable Variation (%) Gross wage rural -0.12

Water consumes manufactured products, such as chemicals and pumps, and services such as electricity and insurance. As the water supply 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 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. 81

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.82

4.2.5 Investment in rural infrastructure

Types of rural infrastructure include:

 Economic infrastructure e.g. roads, electrification, water, bridges, railways, etc.

 Social e.g. health and education

 Institutional e.g. agricultural institutions, cooperatives, etc.

Infrastructure, which is classified as public goods and services, refers to the infrastructure that government is obliged to provide. The inability to provide essential infrastructure may cause the collapse of marginal local economies in rural, agricultural and urban peripheral areas. Many of South Africa‟s poor are rural and although they may not be directly engaged in agriculture, much employment and income is based on agriculture (Meyer et al., 2009), which is the case in the Mamusa and Lekwa-Teemane economies.

The socio-economic impact of development of rural infrastructure and services has shown the following international results:83

 Better rural infrastructure in India led to poverty reduction

81 Financial and Fiscal Commission. 2010. Technical report: Annual submission on the division of revenue 2010/2011. 82 Financial and Fiscal Commission. 2010. Technical report: Annual submission on the division of revenue 2010/2011. 83 Stilwell, T. and Atkinson, D. 1998. The economic rationale and modalities for rural infrastructure development: developmental local government in rural service delivery. DBSA, Midrand.

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 Support programmes in China have had a significant impact on living standards in the target areas

 Infrastructure directly affects agriculture production, which causes households incomes to rise – in Bangladesh

 Agricultural multipliers in Africa are lower in Africa than Asia partially due to lack of infrastructure

 Migrants from rural areas on the east coast of South Africa chose to move to the urban periphery where there was security of land and better infrastructure.

Most agricultural industries are geographically bound to their location and a lack of infrastructure discourages complementary investment by the private sector in establishing labour-intensive, value- adding industries. Meyer et al. (2009) lists the rural and agricultural infrastructure that requires intervention in the country as:

 Water and energy resources

 Roads and railways

 Institutional infrastructure – research and development, agricultural support services, markets and periodic markets.

Figure 13. Real net fixed investment in agriculture, 1970 – 200684

84 Source: SA Reserve Bank, 2006

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Meyer et al. (2009) further notes that the South African government allocates too little resources to long-term investment in renewable energy resource infrastructure, such as renewable energy and long-term water security strategies. The same applies to the lack of resources applied to transport network infrastructure and institutional infrastructure. Responsible and strategically prioritised infrastructure is required for a strong rural and agricultural viable sector.

4.3 NUMBER OF SMMES AND BEE ENTERPRISES TO BENEFIT FROM PROJECT Based on the targets used by the DWA in-house construction, contract participation performance is detailed in the table and figure below. The capital cost of Scenario 1 is R223,6 million for the Mamusa project and at an estimated labour component of 30%, R67 million should be paid out for labour. In addition, the SMME and BEE component are estimated in the table below. Note that these values are not cumulative.

Table 24. Contract participation performance Target values in R Contract price (excluding Lump sums, Provisional Sums, Prime Cost Items and VAT) R223,612,554 Affirmative Black Enterprises (ABE) Target values: 25% of goods, services and materials R55,903,139 Black Enterprises (BEs): 15% of 25% R8,385,471 Black Empowered Enterprises (BEEs): 20% of 25% R11,180,628 Small, Medium and Macro Enterprises (SMMEs): 10% of 25% R5,590,314 Local Enterprise (LEs): 5% of 25% R2,795,157 Labour: 30% R67,083,766 Local labour: 60% of 30% (person days) R40,250,260 Minimum labour content (30% of CP) R67,083,766

Figure 14. Target values according to DWA in-house construction standards85

85 Department of Water Affairs. 2011. Excel spread sheet of De Hoop Dam personnel. Received from Mr. Paul J. Kruger on 29 November 2011.

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All regional bulk projects must identify and specify the amount of anticipated involvement and benefit of SMMEs and BEE enterprises.86 In addition to the benefits specified to SMME in the table above, SMME and BEE enterprises are to benefit both during the project and as an indirect result of the project.

The development of enterprises participating on the construction sector is targeted in the following categories: 87

 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.88

The construction sector in its Charter of Broad-based Black Economic Empowerment has set ownership targets, which should be achieved by 2013:89

 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

86 Dept. of Water Affairs (2011) Water services regional bulk infrastructure programme – Framework for implementation. Version V10, January 2011.P. 19. 87 Department of Public Works (2006) Construction Sector: Broad-Based Black Economic Empowerment Charter. Version 6 (Final) 26-01-06. P.14. 88 Department of Water Affairs and Forestry (2007) A users guide to the forestry sector BBBEE Charter and scorecard. Version 8 June 2007. 89 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. 90

 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. 91

 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. 92

4.4 REGIONAL ECONOMIC BENEFIT FROM THE PROPOSED PROJECT 4.4.1 The economically active and unemployed

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 Mamusa and Lekwa- Teemane municipalities was similar in terms of absolute numbers in 2007. However, the rate of unemployment in Lekwa-Teemane at 39% was higher than that in Mamusa at 32%, while the unemployment rate in the Province was 35% on average.

90 Department of Public Works (2006) Construction Sector: Broad-Based Black Economic Empowerment Charter. Version 6 (Final) 26-01-06. P.12. 91 Department of Public Works (2006) Construction Sector: Broad-Based Black Economic Empowerment Charter. Version 6 (Final) 26-01-06. P.10. 92 Department of Public Works (2006) Construction Sector: Broad-Based Black Economic Empowerment Charter. Version 6 (Final) 26-01-06. P.15.

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Table 25. The economically active aged 15 to 65 years in Mamusa and Lekwa-Teemane in 200793 Mamusa Lekwa-Teemane Employed 7,149 68% 7,188 61% Unemployed 3,395 32% 4,666 39% Economically active 10,544 100% 11,854 100%

4.4.2 Sector of employment

In 2007, the main sector of employment in the North West was mining and quarrying (26%). However, mining and quarrying is not a major sector of employment in Mamusa and Lekwa-Teemane municipalities. In these municipalities, agriculture and hunting predominated, accounting for 32% of employment in Mamusa and 22% in Lekwa-Teemane. Community, social and personal services was the next most important sector of employment, followed by a wholesale and retail trade.

Table 26. Sector of employment of persons aged 15 to 65 years in 200794 Mamusa Lekwa-Teemane North West Agriculture; hunting; forestry and fishing 2,053 32% 948 22% 54,935 8% Mining and quarrying 327 5% 273 6% 177,075 26% Manufacturing 196 3% 641 15% 70,659 10% Electricity; gas and water supply 26 0% 59 1% 3,668 1% Construction 183 3% 239 5% 34,845 5% Wholesale and retail trade 843 13% 642 15% 93,133 14% Transport; storage and communication 83 1% 200 5% 25,341 4% Financial; insurance; real estate and business 433 7% 277 6% 49,166 7% services Community; social and personal services 1,075 17% 908 21% 109,781 16% Other and not adequately defined 1,262 19% 179 4% 71,177 10% TOTAL 6,481 100% 4,366 100% 689,780 100%

4.4.3 Water productivity

Water productivity is an indicator from water account for cross-sector comparisons. Water productivity is the income generated in an industry per cubic meter of water used. It is an indicator of technical efficiency and not economic efficiency (water value) with which it is often confused.95

93 StatsSA, Community Survey 2007 94 : StatsSA, Community Survey 2007 95 Lange, G., Mungatana, E. and Hassan, R. (2007) Water accounting in the Orange River Basin: An economic perspective on managing a trans boundary resource.

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Based on the surface water used by the different sectors compared to the GVA per cubic meter of water used, it shows that manufacturing is the most productive in terms of water use and agriculture the least.

Volumes of water have been matched with employment created per sector. The table below indicates that for every million cubic meters (m³) of water registered for use in the North West, there are 5,941 mining jobs, 73 large-scale agriculture jobs, 357 urban, industry and power jobs. The most are created by water supply and tertiary services at 6,810 jobs per m³ of water.

The table illustrates that the North West‟s employment per million cubic metres of water is higher than the South African average.

Table 27. Number of people employed in each board economic sector for every million cubic metres of registered water use in that sector96 97

Water supply Large-scale Urban, industry Province Mining services and agriculture and power tertiary industry Eastern Cape 39 5,375 18,358 1,345 Free State 46 263 176 867 Gauteng 219 676 285 46,868 KwaZulu-Natal 103 1,177 1,774 1,552 Limpopo 88 1,016 2,069 5,323 Mpumalanga 49 2,616 106 1,865 Northern Cape 26 282 221 2,206 North-West 73 5,941 357 6,810 Western Cape 75 5,106 460 14,306 South Africa 65 1,336 373 3,214

In respect of water productivity, it is anticipated that over 20,000 jobs will be available in 2030 in Schweizer-Reneke.

96 Kv3 (2011). Feasibility study for the upgrading of the bulk water supply to the greater Mamusa area, technical report version 3. April 2010. 97 Van Koppen, B., Sally, H., Liber, M., Cousins, M. and Tupelo, B. (2009) Water resources management, rural redress and agrarian reform. DBSA [Online]. Available from: http://www.dbsa.org/Research/DPD%20Working%20papers%20documents/DPD%20No%207.pdf (Accessed: 5 October 2011).P.21.

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Table 28. Water productivity in Mamusa98 Norm per At current demand 2.835 At 2030 demand of million m3 million m3 4.1000 million m3 Urban, industry and power jobs 357 1,012 1,464 Water supply and tertiary services 6,810 19,306 27,921 Large scale agriculture 73 207 299 Mining 5,941 16,843 24,358

4.4.4 Gross value added

The North West economy is dominated by the mining and quarrying sector and community services. Whereas mining and quarrying accounts for 30% of the GVA of the North West economy, it is only accounts for 1% of economic activity on the study area.

Community services dominate the Mamusa economy contributing to 26% of the gross value added while in Lekwa-Teemane finance contributes to 25% of the gross value added with community services taking second place at 23%. Agriculture, trade and finance also play significant roles in the Mamusa economy. In Lekwa-Teemane, transport and agriculture contribute to 14% of the GVA.

Figure 15. Northwest gross value added 201099

98 Derived from Global Insight and KV3 99 Global Insight

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Table 29. Percentage contribution to Gross Value Added 2010 (in R’000 and constant 2005 prices)100 Mamusa Lekwa-Teemane R'000 % R'000 % Agriculture R124,486 19% R157,476 14% Mining R6,410 1% R29,734 3% Manufacturing R16,035 2% R116,546 10% Electricity R9,346 1% R17,144 1% Construction R19,604 3% R25,359 2% Trade R110,204 17% R95,372 8% Transport R57,424 9% R157,527 14% Finance R136,791 21% R294,114 25% Community services R165,836 26% R266,924 23% Total Industries R646,135 100% R1,160,196 100% Taxes less Subsidies on products R101,887 R184,351 Total (Gross Domestic Product - GDP) R748,022 R1,344,547

The relative contributions to the various sectors are shown in the two figures below for Mamusa and Lekwa-Teemane.

Figure 16. Gross value added 2010 in Mamusa101

100 Global Insight 101 Derived from Global Insight

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Figure 17. Gross value added 2010 in Lekwa-Teemane102 Mamusa‟s and Lekwa-Teemane‟s contribution to the GDP of the North West Province is small ranking third and seventh lowest overall.

Figure 18. Contribution of municipalities to the North West GDP 2010103 4.4.5 Estimated GDP 2030

Gross domestic product in Mamusa grew between 1996 and 2001 by 0.4% and between 2001 and 2010 by 3.2%. It can be assumed that if this growth continues in a linear trend, gross value added in 2005 constant prices will rise to almost R1 billion in 2030.

102 Derived from Global Insight 103 Derived from Global Insight

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Figure 19. Growth in Mamusa's GDP to 2030104 The growth in GDP in Lekwa-Teemane has historically been higher than that in Mamusa at 1.1% between 1996 and 2001 and slightly lower at 2.9% between 2001 and 2010. Based on a linear extrapolation it is expected that the GDP in 2005 constant prices will reach almost R1,8 billion in 2030 in Lekwa-Teemane.

Figure 20. Growth in Mamusa's GDP to 2030105

104 Derived from Global Insight 105 Derived from Global Insight

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5 TECHNICAL CRITERIA

5.1 MASTER PLAN PROPOSAL The upgrading of the bulk water supply to the Greater Mamusa Area and the Bloemhof water treatment works are detailed in the Preliminary Engineering Design Reports compiled by WorleyParsons RSA and Lidwala Consulting Engineers respectively and attached as Annexure D, E & F.

The Dr Ruth Segomotsi Mompati District Municipality IDP (2011/2016), attached as Annexure C further identifies the necessity of the upgrades.

5.2 APPROPRIATENESS AND ACCEPTABILITY OF THE SOLUTION The appropriateness and acceptability of the solutions were discussed per local municipality (LM) under separate headings. The infrastructure related to the Mamusa LM is the bulk water supply scheme whereas the WTW and the abstraction works at Bloemhof fall under the Lekwa-Teemane LM.

5.2.1 Acceptability of the Solutions

Mamusa Local Municipality

Kwezi V3 Engineers (now WorleyParsons RSA) was appointed by the Dr. Ruth Segomotsi Mompati District Municipality to report on the existing primary water supply situation in the Greater Mamusa Area and to prepare a feasibility study to upgrade the bulk water supply to the area, including Schweizer-Reneke, Amalia, Glaudina and Migdol. A first draft was compiled in 2007 (Version 2)106 and updated in 2009 / 2010 (Version 3)107.

In Version 2 of the report an investigation was done into the current and future water demands for the Mamusa LM, but it did not include a detailed population and groundwater investigation. Population forecasting was sourced from various reports and certain assumptions were made with regards to the growth rates of the area. It was also assumed in the Version 2 report that no additional groundwater is

106 Feasibility study for the upgrading of the bulk water supply to the Greater Mamusa area - Technical Report, Version no. 2. March 2008 107 Feasibility study for the upgrading of the bulk water supply to the Greater Mamusa area - Technical Report, Version no. 3. April 2010

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available for exploitation and that only 50% of the existing groundwater resources can be utilised as a result of vandalism to borehole infrastructure.

After submission of the Version 2 report for approval, DWA requested that a formal groundwater investigation is to be done as well as a detailed population investigation. These requirements have been addressed in Version 3 of the report by appointing the following service providers to conduct the studies requested:

 Kayamandi Development Services (Pty) Ltd were appointed to investigate the population in the areas, as well as future growth rates

 A site investigation in which financial information regarding metering and billing was obtained for the per capita calculations

 A detailed groundwater investigation to ascertain whether there are additional groundwater resources that can be exploited to augment the water supply to the Mamusa area was done by Golder Associates Africa

A total of seven scenarios for the supply of water to the Greater Mamusa Area were investigated. It was recommended that Scenario 1 in the Version 3 report be adopted for implementation. In terms of this scenario, raw water will be abstracted at the Bloemhof Weir on the Vaal River, pumped to the Bloemhof water treatment works for treatment and the treated water then conveyed by a pumped pipeline along the Bloemhof/Schweizer-Reneke road over a distance of 59 km to the existing and proposed reservoirs adjacent to the Schweizer-Reneke water treatment works. In terms of this scenario, the pumped supply from the Bloemhof water treatment works will be augmented by existing and new groundwater sources in the Schweizer-Reneke area.

The Version 3 report was approved by the North West RBIG Planning Meeting held the 21 September 2011 in Mafikeng on condition that the social & economic component needs to be finalised and that the DRSMDM agrees on the necessary counter funding. The social & economic component and the counter funding are addressed in several sections of this IRS.

Lekwa-Teemane Local Municipality

For the investigation of the Bloemhof WTW and abstraction works the DRSMDM appointed Lidwala Consulting Engineers. The status of the existing infrastructure had to be reported and a feasibility study to upgrade the existing works to cater for future supply demand of Bloemhof and the Greater Mamusa Area with purified water prepared.

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Several upgrading scenarios were investigated for the combined 2030 demands of both Bloemhof and Greater Mamusa Area and submitted to the DM March 2008 and May 2008 108 109. The feasibility studies were presented to the North West RBIG Planning Meeting held the 21st September 2011 in Mafikeng and approved on the condition stated above.

5.2.2 Existing capacity of infrastructure vs. demand

Mamusa Local Municipality

The population of Schweizer-Reneke and Ipelegeng is projected to increase from 64 261 persons in 2010 to 86 391 persons in 2030 approximately 35%. This brings about an increase in the Average Annual Daily Demand (AADD) of 2 304 mᵌ/d (0.841 million mᵌ/a) with a total AADD in 2030 of 9 934.8 mᵌ/d (3.636 million mᵌ/a). The Gross Average Annual Daily Demand (GAADD) which includes a 10% WTW and 15% distribution losses amounts to 12 567.5 mᵌ/d (4.587 million mᵌ/a).

The demand is currently met by means of two water sources, i.e. the Wentzel Dam as primary supply and the Townlands Borehole Scheme as supplementary in dry periods.

The Wentzel Dam is situated in the Harts River and has a full supply capacity of 6.203 million mᵌ. The 1:100 year stochastic firm yield of the source, with no ecological water release, is calculated at 2 960 mᵌ/d (1.08 million mᵌ/a), which is the amount of water available for primary water use.

The total yield of the local groundwater sources is 4 892.96 mᵌ/d (1.786 million mᵌ/a) with the Townlands Borehole Scheme consisting of 15 boreholes with a sustainable yield of 3 791.8 mᵌ/d (1.384 million mᵌ/a) and an additional groundwater source identified during the feasibility study stage of 1 100 mᵌ/d (0.4015 million mᵌ/a). These boreholes can only be used when the water level in the Wentzel Dam drops below 4.82 m during the period 1 January to 30 September or below 4.56 m during the period 1 October to 31 December of any year, according to an agreement with the relevant authorities.

In summary, the demand for the 2030 projection is 12 567 mᵌ/d (4.587 million mᵌ/a) exceeds the current local sources with a sustainable yield of 7 851.9 mᵌ/d (2.866 million mᵌ/a). This results in a

108 Feasibility study for upgrading of the Bloemhof Water Treatment Works. Technical report - Version no.1. March 2008 109 Feasibility study for upgrading of the Abstraction Works at Bloemhof Dam. Technical report - Version no.1. May 2008

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deficit of 4 715.1 mᵌ/d (1.721 million mᵌ/a) that needs to be supplemented from Vaal River surface water near the Bloemhof Dam. This will ensure a supply of potable water to Schweizer-Reneke.

The existing bulk storage capacity available in Schweizer-Reneke is 14.1Mℓ. It consists of three concrete reservoirs situated on Massouwskop north-east of Schweizer-Reneke with a combined capacity 13.5 Mℓ, storing water from the Wentzel Dam and Townlands Boreholes as well as a 600 kℓ pressed steel reservoir constructed to store the groundwater from the Mareesin Farm boreholes.

The Guidelines for Human Settlement Planning and Design recommends a storage capacity of 48 hours x AADD. Therefore, the reservoirs at Schweizer-Reneke have to be increased by 7 Mℓ from the existing 14 Mℓ to 21 Mℓ. This will be done by constructing a concrete reservoir on Massouwskop next to the existing reservoirs (13.5 Mℓ). The construction of the storage facility will take place during the last phase of the overall project (not included in this study).

Lekwa-Teemane Local Municipality

The population growth of Bloemhof is projected at 20% over the period from 2010 to 2030. This implies that the 2010 population of 29 259 persons will increase to 35 357 persons in 2030. As a result hereof, the AADD is projected to increase from 5 898 mᵌ/d (2.153 million mᵌ/a) to 7 904 mᵌ/d (2.885 million mᵌ/a). The GAADD of Bloemhof (including 10% WTW and 15% distribution losses) amounts to 9 998 mᵌ/d (3.649 million mᵌ/a).

Bloemhof's water is abstracted from the Vaal River at the weir near the Bloemhof Dam. Water is conveyed to the WTW in Bloemhof. These facilities were commissioned in 1992 and designed for a capacity serving the projected 2008 population of 9 600 mᵌ/d (3.504 million mᵌ/a). The abstraction works are also encountering difficulties during drought periods and flood occurrences due to its design. Both the abstraction works and the WTW are running at full capacity and hence the capacity of these works needs to be increased.

To accommodate the total demand of Bloemhof (9 998 mᵌ/d) and the additional demand of Schweizer-Reneke (4 715 mᵌ/d), the WTW will have to be upgraded to 24 400 mᵌ/d which includes a summer peak factor of 1.5. This implies that the WTW of 9 600 mᵌ/d will have to be upgraded to its full design capacity of 14 400 mᵌ/d with an additional capacity of 10 000 mᵌ/d to achieve a total capacity of 24 400 mᵌ/d. The abstraction works with a capacity of 9 600 mᵌ/d will have to be upgraded to supply the WTW with the capacity of 24 400 mᵌ/d.

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5.2.3 Infrastructure description

Mamusa Local Municipality

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

 Bloemhof pump station adjacent to the Bloemhof water treatment works: Water will be abstracted from the clear water reservoir at the Bloemhof water treatment works and pumped over a distance of 25.1 km to the elevated Olievenfontein storage tank.

 Rising pipeline to the elevated Olievenfontein storage tank. The pipeline will be a 355 mm ND uPVC pipeline.

 Olievenfontein pump station adjacent to the Elevated Olievenfontein Storage Tank: Water will be abstracted from the elevated Olievenfontein storage tank and pumped over a distance of 22.9 km to the ground level Vaalpoort storage tank.

 Rising pipeline to the ground level Vaalpoort storage tank: The pipeline will be a 355 mm ND uPVC pipeline.

 Gravity pipeline from the ground level Vaalpoort storage tank to the existing reservoir at the Schweizer-Reneke water treatment works over a distance of 11.3 km. The pipeline will be a combination DN 400/355 uPVC pipeline.

A general layout of the bulk water supply scheme is included in Volume 3 of the Preliminary Design Report attached as Annexure D.

Lekwa-Teemane Local Municipality

The infrastructure to be upgraded in the Lekwa-Teemane LM are the abstraction works and the WTW.

The abstraction works entails the building of a new pump station in the vicinity of the existing works to supply the Bloemhof water treatment works at its maximum required capacity. This will cater for the projected 2030 demand of Bloemhof and Greater Mamusa in additional to water from the other available borehole sources and Wentzel Dam.

The most suitable upgrade of the WTW infrastructure is the reinstatement of the existing treatment train at the 15 Ml/d plant and the construction of a new 10 Ml/d plant using primary flocculation with high rate sedimentation, followed by a DAF process followed by a rapid gravity sand filtration process and the construction of a new 900 m3 clear water well. The disinfection method will be chlorine.

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5.3 OPTIMAL CHOICE OF BULK INFRASTRUCTURE 5.3.1 Bulk water scheme for Greater Mamusa Area

Pipe material and diameter

For water supply schemes similar to this one, the most economical pipeline diameter is usually a pipeline velocity that varies between 0.7 and 2.0 m/s. For this scheme, with a design flow of 89 l/s, the most economical internal pipe diameter is between 238 and 402 mm. Pipe materials that can be considered within this diameter range are steel, ductile iron (DI), and 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 (excluding VAT and delivery to site) for the various materials is given below (based on quotes received from pipe suppliers):

 350 mm ND, mPVC class 12 580 R/m

 350 mm ND, uPVC class 12 690 R/m

 350 mm ND, oPVC class 12 740 R/m

The above pipe costs can vary from supplier to supplier and is only provided to indicate the likely cost differences between the various pipe materials for a similar pipe size.

Based on the costs, steel, DI and HDPE pipe (not listed above) cannot be considered for this project. Steel and DI pipe have the further disadvantages that a suitable cathodic protection system needs to be provided and maintained to protect the pipe against external corrosion. Also, for a continuously welded steel pipe of this size, the only lining that can be considered is a cement mortar lining, as a painted lining cannot be repaired after welding of the pipe joints.

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 (for a pipe velocity of 1.0 m/s and a pipe diameter of 300 – 400 mm).

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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

Pumps stations were designed to operate with two duty pumps 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. Operating time for pumps was fixed at 20 hours/day maximum. All pumps will be fixed speed centrifugal pumps operating at 1450 rpm.

Four hours of the design average daily demand will be provided as suction storage in the elevated Olievenfontein storage tank at the Olievenfontein pump station.

Pipeline Air Intake and Discharge

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

 On pipeline apex points

 Every 1000 m on long ascending sections

 Every 1000 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.

Air valves are sized for the following conditions:

 Pipe burst of 15% of pipe area.

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 Pipe drainage: Orifice size 125 mm

 Initial and subsequent pipe filling at velocity of 0.5 m/s.

 Effective de-aeration during normal operation

The air valve sizing was performed using the Vent-O-Mat air valve sizing program.

For filling and normal operating conditions, the function of the air valve is to discharge air from the pipeline to 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 are 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 with a 125mm orifice size to limit the scour time to at most 4 hours maximum. Maximum flow velocity in the scour installation pipework is limited to 6.0m/s maximum.

Pipe Bedding

A 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 pipe-soil interaction calculations for flexible pipe to assess to suitability of the soil to provide adequate pipe support.

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

Initial Assessment

The total distance from the Bloemhof water treatment works to the highest point on the pipeline profile is approximately 48.080 km. An intermediate storage tank will be provided at this point. Water will be pumped to this storage tank and then gravitate further to the existing reservoir at the Schweizer- Reneke water treatment works over a distance of 11.3 km.

For a single pump station configuration at the Bloemhof water treatment works, the required pumping head for a 350 mm ND rising pipeline over 48.08 km will be approximately 275 m. Over the first 16 km of the rising pipeline the internal pipe pressure will be above 200 m. Only a steel or DI pipe will have the required strength for these pressures. Due to the high costs of steel and DI pipes, a single pump station configuration will thus not be cost effective and was not considered further.

An assessment of the pipe supply costs given in this Section shows that mPVC pipes are less expensive than any of the other pipe materials. mPVC pipes are also available up to class 20 for pipe sizes in the range 315 mm – 500 mm ND and are thus suitable for internal pipe pressures up to 200m or 2000 kPa (uPVC pipes are only available up to class 16 in the range 315 mm – 400 mm ND).

Cost Optimization

The cost of any pumping scheme is determined by the combined cost of the pump station and the corresponding rising pipeline. All other things being equal, the pipeline cost is determined by the pipe diameter and pump station cost 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 mPVC 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. The economic models were based on a pumping capacity of 89 l/s with two duty pumps and one standby pump.

The economic model for each pipeline diameter included the following cost components:

 Total capital cost of pump station and pipeline

 Annual operating and maintenance cost of the pump station and pipeline

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 Energy cost

 Refurbishment costs

All costs including capital, annual operating and maintenance costs, refurbishment costs and energy costs were discounted to net present values based on the following parameters:

 Discount rate (real): 6, 8 and 10%

 Discount period: 30 years

 NPV base date: 2013

It is assumed that construction will be completed within one year (2013) and that all annual costs will commence in the second year (2014). The capital cost of pump stations are based on the cost tables for pump stations as compiled by the City of Tshwane Metropolitan Municipality and escalated to the year 2013. The cost breakdown of the pump stations are based on the following percentages of the total pump station costs:

 Civil/building infrastructure: 30 % of total pump station cost

 Mechanical component: 50 % of total pump station cost

 Electrical component: 20 % of total pump station cost

Energy costs were based on the Eskom Miniflex at Bloemhof pump station and Ruraflex (Olievenfontein pump station tariffs. A weighed average energy cost of the Eskom time of use costs is used in the calculations. It was further assumed that energy costs will increase by 20% during the years 2013, 2014 and 2015 per annum. Annual energy costs are based on the average annual transfer of water.

Annual operating and maintenance cost were based on a percentage of capital cost. The following percentages are used for calculating annual operating and maintenance costs:

 Pipelines: 0.50 % of pipeline costs

 Civil/building infrastructure: 0.75 % of civil/building costs

 Mechanical works: 4.00 % of mechanical works costs

 Electrical works: 3.00 % of electrical works costs

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Refurbishment costs for mechanical and electrical works were based on 15% of the costs of the mechanical and electrical works every five years.

The costs of pipelines were based on the pipe costs supplied by pipe suppliers and the costs of other works such as civil/building works, trench excavations, pipe bedding, etc. are based on historical costs for similar work and escalated to 2013.

An economic cost comparison for four different pipe sizes (315 mm, 355 mm, 400 mm and 450 mm), for the Bloemhof as well as the Olievenfontein pump stations, based on net present value is shown in Graphs 1 and 2 below.

Figure 21. Graph 1: Bloemhof Pump Station and Graph 2: Olievenfontein Pump Station The graphs indicate that for both pump stations, the most economical pipeline diameter is 355 mm, for each of the different discount rates of 6%, 8% and 10%.

Operational philosophy

Operating Principles

It is proposed that the control of the water supply scheme is based on a fully integrated automated system, except for activities that require operators such as cleaning, normal and preventative maintenance, etc. Appropriate communication, monitoring and control systems will be provided to allow for the effective and efficient control and integration of the scheme. The primary communication network will be wireless UHF by means of radio telemetry.

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Scheme Control System

The control system will be based on a radio frequency based system as opposed to a hard wired system. The calculations for the line of sight indicates the following RF profile between Bloemhof and Schweizer-Reneke.

Figure 22. Line of Sight Profile (Bloemhof to Schweizer-Reneke) On closer inspection it is only the first section of the path, between Bloemhof and the Olievenfontein pump station that requires a repeater station, due to line of sight issues. The profile for that section of the RF path is indicated in Figure 23.The optimal positioning for the repeater station was identified at co-ordinates (S27.60019, E25.56772).

The cost of the repeater station is approximately 33% of that of a hard wired fibre optic link. Another consideration is that the RF link provides flexibility with regards to future system expansion.

It is proposed that the head end equipment be provided at the Bloemhof water treatment works. The existing Human Machine Interface (HMI) at the Bloemhof station will be re-programmed to enable the operators to set a required flow rate to the Schweizer-Reneke water treatment works.

The control philosophy of the system shall be that of a reverse, cascaded loop system. The water level in the Schweizer-Reneke reservoir will control the flow between the Vaalpoort storage tank and the Schweizer-Reneke reservoir. The rate of flow will be determined by the setting on the HMI.

Figure 23. Line of Sight Profile (Bloemhof to Olievenfontein pump station)

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A pre-set level in the ground level Vaalpoort storage tank will in turn activate the operation of the Olievenfontein pump station and switch off the pumps when the tank reaches a full level. The water level in the elevated Olievenfontein storage tank will provide start and stop signals for the operation of the Bloemhof pump station.

For monitoring purposes, all flow rates, storage tank water levels, pipeline pressures, etc. will be displayed at both ends of the line.

Operating Times

It is assumed that the Eskom Ruraflex (Olievenfontein pump station) and Miniflex (Bloemhof pump station) tariff structures will be applicable to the power requirements of the pump stations. In order to reduce electricity costs, it is proposed that the pump stations operate (as far as is possible) only during off-peak and standard time of use periods of the tariff structures.

The Ruraflex and Miniflex tariff structures have the following time of use periods:

 Weekdays: Peak hours : 5

Standard hours: 11

Off-peak hours: 8

 Saturdays: Peak hours : 0

Standard hours: 7

Off-peak hours: 17

 Sundays: Peak hours : 0

Standard hours: 0

Off-peak hours: 24

The water supply scheme is envisaged to operate a maximum of 20 hours/day at maximum demand in 2030. In the initial year of the scheme the daily pumping time will be much less than 20 hours/day. The operating procedure should be to pump as much as possible during the off-peak and standard time of use periods to ensure that the existing reservoir at Schweizer-Reneke is full before the start of the peak time of use periods.

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Gravity Pipeline Flow Control

The gravity pipeline will discharge into the reservoir at the existing water treatment works in Schweizer-Reneke. The flow rate into the reservoir must be controlled. A flow control installation will be provided at the reservoir for this purpose. The operating upstream and downstream hydraulic conditions at the control valve installation are given below.

Table 31. Control Valve Flow Parameters

Downstream Excess Pipe Condition Water Level Operating Flow Upstream HGL HGL Head (New/Old) Vaalpoort (l/s) (masl) (masl) (m) (TWL/LWL)

44.5 1380.5 1350.0 30.5 New TWL

1375.2 1350.0 25.2 New LWL

1379.2 1350.0 29.2 Old TWL

1374.2 1350.0 24.2 Old LWL

89.0 1364.1 1350.0 14.1 New TWL

1359.1 1350.0 9.1 New LWL

1359.0 1350.0 9.0 Old TWL

1354.0 1350.0 4.0 Old LWL

Notes: 1. TWL = Top water level

LWL = Low water level

The flow control equipment will comprise of 250 mm ND pipework, a flow meter and a hydraulic flow control valve. Isolating valves will be installed upstream and downstream of the flow meter and control valve.

The flow control assembly must be able to perform the following functions:

 Open/close on demand

 When open shall maintain the flow rate to an adjustable, pre-set value

The flow control assembly must respond to the following input signals/parameters:

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 Water level in the Schweizer-Reneke reservoir

 Flow rate from the flow meter

 Water level in the high point storage tank

When the water level in the Schweizer-Reneke reservoir is low, the control valve assembly will open. When open, the control valve assembly will maintain a constant pre-set operational flow rate regardless of changes in upstream and downstream operating pressures. The pre-set flow rate will be adjustable between the limits of 44.5 and 100l/s. When the water level in the Schweizer-Reneke reservoir reaches the full supply level, the control valve assembly will close.

The water level in the high point storage reservoir will be allowed over-ride the control provided by the water level in the Schweizer-Reneke reservoir. The control valve assembly will only be allowed to operate if there is an adequate water depth in the high point storage reservoir.

Pipeline and pump station hydraulics

Steady State Flow

Pipeline friction losses are calculated using the Darcy-Weisbach and Colebrook/White equations. Friction losses are calculated for the absolute roughness values of both new and old pipes as shown in Table 31. The Bloemhof and booster pump station operating parameters are given in Table 31 and the friction losses and flow parameters of the pump station rising pipelines are given in Table 32 below.

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Table 32. Pump Station Parameters

Pump Station/Parameter Parameter Value Bloemhof Pump Station

Suction side static level: Top (masl) 1235.0

Bottom (masl) 1226.0

Delivery side static level: Top (masl) 1315.0

Bottom (masl) 1310.0

Static head: Maximum (m) 89.0

Minimum (m) 75.0

Pump head (2 pumps at design discharge): New pipe: Maximum (m) 153.9

Minimum (m) 139.9

Old pipe: Maximum (m) 169.3

Minimum (m) 155.3

Olievenfontein Pump Station

Suction side static level: Top (masl) 1315.0

Bottom (masl) 1310.0

Delivery side static level: Top (masl) 1386.5

Bottom (masl) 1381.5

Static head: Maximum (m) 76.5

Minimum (m) 66.5

Pump head (2 pumps at design discharge): New pipe: Maximum (m) 135.5

Minimum (m) 125.5

Old pipe: Maximum (m) 149.4

Minimum (m) 139.4

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Table 33. Pipeline Parameters

Pipeline/Parameter Parameter Value

Bloemhof Pump Station rising pipeline

Type/Diameter (mm) mPVC/355

Design flow (l/s) 89

Flow velocity at design flow (m/s)

Friction loss: New pipe 62.1

Old pipe 80.3

Olievenfontein Pump Station rising pipeline

Type/Diameter (mm) mPVC/355

Design flow (l/s) 89

Flow velocity at design flow (m/s) 1.1

Friction loss: New pipe 59.0

Old pipe 72.9

Vaalpoort Gravity pipeline

Type/Diameter (mm) mPVC/400+355

Design flow (l/s) 89

Static head: Maximum (m) 36.5

Minimum (m) 31.5

Flow velocity at design flow: ND 400 (m/s) 0.8

ND 355 (m/s) 1.1

Friction loss: New pipe 22.5

Old pipe 27.5

Transient analyses

Introduction

A preliminary transient analysis of the Bloemhof and Olievenfontein pump lines and the Vaalpoort gravity pipeline was undertaken. A final transient analysis will be undertaken during the detail design stage. The software that was used to undertake the transient analysis is the Surge 2010 Transient Flow Model of KYpipe LLC. This software is specifically suited for the transient analysis of the

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pipelines of this project. The transient pressures that the pipelines will be subjected to as a result of transient flow events were investigated and appropriate mitigation measures are identified.

Analysis Parameters

The proposed pipes to be installed under this project are mPVC pipes of various classes. The relevant properties and/or parameters that were used in the transient analysis of the pipelines are given below.

Table 34. Pipeline Parameters

Pipeline Property/Parameter and Water Levels Parameter Value

Pipe wave celerity (m/s)

Class 9 270

Class 12 312

Class 16 363

Class 2 0 407

Allowable pipe transient pressure (kPa)

Class 9 1125

Class 12 1500

Class 16 2000

Class 20 2500

Pipe roughness and pressure

Absolute roughness, k (mm) 0.025

Pipe maximum surge pressure 1.25 x pipe pressure class

Pipeline minimum surge pressure (m) -3.0 m

Storage tank water levels

For Bloemhof pump line

Bloemhof Reservoir (TWL) (masl) 1235.0

Olievenfontein Storage Tank (LWL) (masl) 1310.0

For Olievenfontein pump line

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Pipeline Property/Parameter and Water Levels Parameter Value

Olievenfontein Storage Tank (TWL) (masl) 1315.0

Vaalpoort Storage Tank (LWL) (masl) 1381.5

For Schweizer-Reneke gravity pipeline

Vaalpoort Storage Tank (TWL) (masl) 1386.5

Schweizer-Reneke Reservoir (LWL) masl) 1350.0

For the mPVC pipes, the allowable pipe pressure for transient flow conditions were fixed at 1.25 x the allowable pipe pressure (1.25 x pipe pressure class) for steady state flow conditions. The rubber joints of the mPVC pipes should not be subjected to a negative pressure in excess of -3.0 m.

The pipe absolute roughness as for new pipes was used as this would provide more conservative analysis results.

To simulate the impact of pump transients, a pump head/flow relationship that will provide the required design flow at the design head for each pump station, was selected from standard commercially available multistage pump curves (KSB WKLn pump types). A pump configuration of two duty pumps in parallel to deliver the design discharge (89 l/s) was used in the transient analyses.

Surge Mitigation Procedure

The provision of effective surge mitigation measures to protect a pipeline against the negative impacts of transient flow events comprises of the following:

 The identification of relevant transient event scenarios

 The hydraulic analyses of these transient event scenarios to assess their impacts on the pipeline and the provision of effective protection and/or mitigation measures against the negative impacts of the transient events

For each pipeline, the procedure followed in the identification and selection of appropriate surge elimination and/or mitigation measures and devices are as follow. Each transient flow scenario was analysed in two stages. In the first stage, the pipeline was analysed without any surge protection and/or mitigation measures/devices in place, except for air intake/discharge valves that are required for pipeline burst, drainage and filling requirements and for air release during normal pipeline operation. In the second stage, the impact of the transient event along the surge-unprotected pipeline

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profile is assessed. Where negative impacts occur, appropriate surge mitigation measures/devices are put in place to mitigate and/or eliminate the negative impacts.

The identification of the relevant transient events for each pipeline, the analyses results of the event and the appropriate mitigation measures to be provided are discussed in the PDR.

Electrical supply

Bloemhof Pump Station

The electrical supply at the Bloemhof Pump Station is taken to form part of another package (Lidwala).

Olievenfontein Pump Station

At the booster pump station the electrical supply shall be made available by Eskom from the existing overhead line. The supply voltage is taken to be 22 kV, which is Eskom‟s standard rural distribution voltage. From this point, the supply shall be taken to a 315 kVA transformer to distribute the LV supply at 400 V via underground cables to the pump station. The distribution in the pump station shall be from the main MCC panel to be located in the LV Room of the pump station. The pump motor control shall be by means of soft starters to reduce the start-up current, thereby reducing the peak demand on the system. Area lighting shall be manually switched from the gate, to further reduce electrical consumption and reduce lighting pollution.

Ground Level Vaalpoort Storage Tank

The electrical connection at the high point storage tank shall be a 60 A, single phase connection. The only power requirement being for some site lighting and to power the control equipment. An outdoor kiosk shall be provided to house both the control and electrical switchgear.

Eskom indicated during several conversations and meetings that they do not foresee any difficulties in supplying the required electricity to both areas. An application was submitted to Eskom and their response is expected within the following week.

Schweizer-Reneke Reservoir

The existing electrical infrastructure at the Schweizer-Reneke reservoir shall be utilised. The only additions to the load at Schweizer-Reneke shall be the control equipment and this is sufficiently small to not require an upgrade in the electrical connection.

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Repeater Station

The repeater station shall be fed by an internal 100 W Photo Voltaic array. No external power supply shall be required.

5.3.2 Water treatment works at Bloemhof

Raw Water Quality Data

For process design purposes, it is necessary to obtain historic raw water quality data to make an informed decision on the processes required to address troublesome parameters. Water quality deterioration in the Bloemhof Dam has been documented in various sources and Lidwala/CSV obtained water quality data from the following:

a. Water qualities available on the Blue Drop website of the Department of Water Affairs in order to provide guidance on the ability of the plant to produce a final water adhering to the SANS241 Class I standard

b. Raw water quality from Department of Water Affairs – Resource Quality Services (Chemical components - November 1972 to current)

c. Raw water quality from Department of Water Affairs – Resource Quality Services (Algae data - March 1980 to current)

An analysis of available chemical data is presented in Table 35 below. A separate column indicating the 95th percentile divided by the 50th percentile is presented in order to obtain an insight on the variability of the raw water.

Table 35. Raw Water Data in the Bloemhof Dam

Determinant Count 50th % 95th % 95th / 50th SABS 241 Rand Water Calcium - mg/l 1596 35.90 62.23 1.7 - 80 Chloride - mg/l 1598 33.44 72.80 2.2 300 100 Conductivity - mS/m 1652 53.00 87.44 1.6 170 45 Fluoride - mg/l 1538 0.37 0.66 1.8 1.5 0.7 Total Hardness 1596 163.58 281.77 1.7 - 20 - 200 Potassium - mg/l 1596 7.25 12.38 1.7 - 25 Magnesium - mg/l 1596 17.39 33.30 1.9 - 50 Ammonia - mg/l 1594 0.00 0.02 8.5 1.5 0.2 Nitrate+Nitrite - mg/l 1633 0.05 0.73 14.5 - 6

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Determinant Count 50th % 95th % 95th / 50th SABS 241 Rand Water Sodium - mg/l 1594 35.60 69.73 2.0 200 100 Phosphate - mg/l 1612 0.02 0.06 4.3 - 1 RYZNAR 1513 7.75 8.85 1.1 - - LANGELIER 1513 0.33 0.89 2.7 - - Aluminium - mg/l 78 0.04 0.09 2.6 0.3 0.15 Arsenic - mg/l 16 0.10 0.10 1.0 0.01 0.05 Boron - mg/l 41 0.15 0.42 2.8 - - Barium - mg/l 16 0.04 0.06 1.4 - - Chlorophyll a - ug/l 358 17.76 110.60 6.2 - 1 Cadmium - mg/l 16 0.005 0.005 1.0 0.03 0.05 Chromium - mg/l 16 0.003 0.003 1.0 0.05 0.05 Copper - mg/l 16 0.006 0.006 1.0 2 0.05 Iron - mg/l 16 0.006 0.008 1.3 0.3 0.2 Manganese - mg/l 16 0.001 0.001 1.0 0.1 0.05 Nickel - mg/l 16 0.004 0.004 1.0 0.07 0.15 Lead - mg/l 16 0.054 0.054 1.0 0.01 0.01 Sulphate - mg/l 1598 97.10 212.74 2.2 250 200 Silica - mg/l 1594 0.77 5.47 7.1 - - Alkalinity - mg/l 1622 101.50 133.40 1.3 - 60 - 120 Temperature - Degree C 4 17.10 21.80 1.3 - - Turbidity - NTU 118 2.46 60.66 24.6 1 0.5 pH 1641 7.92 8.45 1.1 5 - 9.7 5 - 9.7

From the above table, the following remarks regarding the quality of the raw water can be made:

 The salinity levels are slightly more than guidelines set by Rand Water, but well within limits sets by SANS241. Levels exceeding 70 mS/m does have a noticeably salty taste but is well tolerated in terms of health and aesthetic factors.

 The water can be regarded as hard and scaling of equipment can occur (such as kettles and geysers). Elevating the pH level of the water can treat this symptom.

 The arsenic levels in the water is of concern and additional samples should be taken to confirm levels.

 The iron and manganese levels are not excessive and no problems are foreseen.

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 The algae levels in the Bloemhof dam, expressed as Chlorophyll a, are high and needs to be addressed in the process design. More attention on this parameter is provided later in this section.

 Turbidity levels are such that direct filtration is not recommended. The 95th percentile level of 60.7 NTU does however warrant a more aggressive approach in terms of phase separation where either a conservatively designed dissolved air flotation (DAF) unit can be installed or a high rate settler (see percentile graph Figure 24 below).

 The alkalinity levels are high indicating that the water is well buffered. By adding a metal coagulant to reduce the pH levels, large variations in pH will be prevented. This will have an impact on the addition of an alkaline such as lime or caustic soda to stabilise the water.

 The dam serves as a buffer preventing large variations in quality although large variations are due to ammonia, nitrate, phosphate, chlorophyll a, silica and turbidity.

 The Ryznar index indicates a water which can be regarded as aggressive (6.8 – 8.5 is aggressive), while the Langelier index on the other hand points to a water which is super

saturated and will have a tendency to precipitate a scale layer of CaCO3. This contradiction was checked and confirmed by means of the Stasoft programme where the 50th percentile water parameters indicate a water which has a slight positive precipitation potential of 0.4 mg/l as th CaCO3 and the 95 percentile water has a precipitation potential of 15.3 mg/l as CaCO3.

The turbidity distribution in the Bloemhof Dam is skewed and probably does not reflect a true reflection on overall raw water. This comment comes after the operational data from the plant was investigated and raw water turbidities of around 20-35 NTU were found. The graph below shows that the raw water turbidity is below 5 NTU for 70% of the time. In this instance a direct filtration step is recommended, although higher turbidities are actually experienced. The Bloemhof Dam will act as a settling step and a high rate settling system will probably be sufficient to deal with occasional peaks of turbidity experienced in the raw water.

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Figure 24. Turbidity Percentile Graph

Final Water Quality Data

Operational Data

Operational data was received from Aqua Agri solutions, which provide an insight into the ability of the current process train to treat the raw water from Bloemhof Dam. This data is summarised in Table 36 below:

Table 36. Operational Data of the Bloemhof WTP

Raw water Flow Settled Final Water Flocculant Chlorine Free Date Turbidity Turbidity Turbidity dosage dosage Chlorine (Ml/d) NTU (NTU) (NTU) (mg/l) (mg/l) (mg/l) 5 Apr 2011 9.9 139.0 21.0 3.87 Not stated 8 0.4 10 Aug 2011 5.4 27.8 3.2 0.65 10.7 1.8 1.6 10 Aug 2011 9.9 27.8 12.7 2.61 10.7 1.8 1.6 15 Sep 2011 7.9 30.3 2.3 0.56 16.7 2.7 2.2 6 Oct 2011 7.6 35.1 3.7 0.23 32.2 1.1 4.0 15 Nov 2011 10.8 21.9 13.7 0.60 32.3 1.2 0.2 7 Dec 2011 10.8 27.1 3.42 0.66 23.5 2.3 4.0

From the above, the following statements are made:

 It seems as if the raw water turbidity is higher than the values stated in the DWA data. To be conservative, this data will be accepted.

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 The settling step removes between 38% - 92% of the incoming raw water turbidity. It can be expected of a well-designed sedimentation unit to remove 90% of the incoming load.

 On 10 August 2011, two set of results are presented, namely one when the plant was operating at full flow of approximately 10 Ml/d and the other when only one raw water pump was operational (5.4 Ml/d). The effect of the increased flow is clearly seen on the ability of the settling step to remove suspended solids in that the efficiency for removal dropped from 88% to 54%. The resultant higher load onto the filters is also clearly seen in the performance of the filters (0.65 NTU vs 2.61 NTU at the higher flow).

 The performance of the filters can be improved. Removal of suspended solids measured as a turbidity of between 75% and 96%, whereas a well-operated filter need to remove 90% of solids placed on the filter. Apart from the data of 15 November 2011, it is clear that the filters battle to deal with a turbidity value higher than 10 NTU.

 Relatively high polymer dosages are required to flocculate the water. It may be advantageous to experiment with other flocculants such as Ferric chloride or alum since the alkalinity is high and it is not foreseen that these chemicals will have a marked effect on the stability of the water.

Summary: The raw water is eutrophic and provision must be made for removal of algae in the process design. It seems as if the Bloemhof dam acts as a sedimentation tank and the raw water turbidity is fairly low – this can point to a more aggressive design for phase separation of inorganic particles, e.g. a conservatively designed DAF unit. The water is well buffered and should another flocculant be used in the future, we do not foresee that a stabilizing agent such as lime of soda ash will be required. The final water produced by the existing plant is of a good quality and the current process train delivers a good quality water. We are however concerned on the ability of the phase separation processes to deal with higher volume flows as can be seen from Error! Reference source not found.6 above.

Compliance Data

Compliance data was received from DWA on the performance of the current plant measured against the SANS241 water quality parameters. This data is in the Blue Drop System (BDS) and measured for the calendar year of 2011 and summarised in Table 37 below:

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Table 37. Data from the BDS on the Water Quality produced by the Bloemhof WTP

Compliance per determinant Failures/Analysis % Compliance

Microbiological (Health)

E.coli 0/45 >99.9%

Faecal coliform bacteria 0/0 0.0%

Chemical (Health)

Aluminium as Al 0/2 >99.9%

Antimony as Sb 0/2 >99.9%

Arsenic as As 0/2 >99.9%

Cadmium as Cd 0/2 >99.9%

Cobalt as Co 0/2 >99.9%

Copper as Cu 0/2 >99.9%

Cyanide (recoverable) as CN¯ 0/2 >99.9%

Fluoride as F¯ 0/2 >99.9%

Iron as Fe 0/2 >99.9%

Lead as Pb 0/2 >99.9%

Manganese as Mn 0/2 >99.9%

Mercury as Hg 0/2 >99.9%

Nickel as Ni 0/2 >99.9%

Nitrate and Nitrite as N (health) 0/0 0.0%

Phenols 0/2 >99.9%

Selenium as Se 0/2 >99.9%

Sulfate as SO4 0/2 >99.9%

Total Chromium as Cr 0/2 >99.9%

Total Trihalomethanes (health) 0/0 0.0%

Vanadium as V 0/2 >99.9%

Physical, Organoleptic (Non Health)

Calcium as Ca (aesthetic/operational) 0/2 >99.9%

Chloride as Cl¯ 0/2 >99.9%

Colour 0/2 >99.9%

Conductivity at 25º C 0/2 >99.9%

Dissolved Organic Carbon as C (aesthetic/health) 0/2 >99.9%

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Compliance per determinant Failures/Analysis % Compliance

Magnesium as Mg (aesthetic/operational) 0/2 >99.9%

Odour 0/0 0.0%

Potassium as K (operational/health) 0/2 >99.9%

Sodium as Na 0/2 >99.9%

Taste 0/0 0.0%

Total Dissolved Solids 0/2 >99.9%

Turbidity 0/2 >99.9%

Zinc as Zn 2/2 0.0%

SANS 241 Operational Tests

Ammonia as N 0/0 0.0%

Coliform Operational (Absence / Presence) 0/0 0.0%

Cryptosporidium (protozoan parasite) (operational) 0/0 0.0%

Heterotrophic Plate Count (operational) 0/0 0.0%

pH at 25º C 0/2 >99.9%

Protozoan parasites - Cryptosporidium species 0/0 0.0%

Protozoan parasites - Giardia species 0/0 0.0%

Residual Chlorine (operational) 0/0 0.0%

Somatic Coliphages 0/0 0.0%

Total Coliforms 2/47 95.7%

Turbidity (operational) 0/0 0.0%

Summary: The raw water is eutrophic and provision must be made for removal of algae in the process design. It seems as if the Bloemhof dam acts as a sedimentation tank and the raw water turbidity is fairly low. This can point to a more aggressive design for phase separation of inorganic particles, e.g. a conservatively designed DAF unit. The water is well buffered and should another flocculant be used in the future, it is not foreseen that a stabilizing agent such as lime of soda ash will be required. The final water produced by the existing plant is of a good quality. The ability of the phase separation processes to deal with higher volume flows shown in Table above is a concern.

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Process Design

The design must take heed of a number of issues during the process design, which will eventually lead to the most effective process train. Figure 24 below indicates these aspects which must be addressed during this exercise.

Iron and manganese are troublesome if present in high concentrations and in the dissolved reduced state. These metals cause staining of household appliances and laundry and needs to be removed before the water is pumped into the distribution network.

Flocculation of suspended solids is required to remove these particles in a phase separation process such as sedimentation or sand filtration.

Phase separation will be required after the formation of the coagulated particles for physical removal of these flocs from the main water body. Processes to be considered are clarification, dissolved air flotation and a filtration process e.g. sand filtration or a physical barrier such as membranes.

After phase separation, attention must focussed on the removal of dissolved substances and if required, the disinfection of pathogens such as Cryptosporidium and Giardia. Troublesome parameters specifically targeted in this stage of treatment includes taste and odour compounds, harmful organic compounds such as pesticides, and constituents associated with treated sewage water. Powerful oxidants such as ozone or chlorine dioxide are normally used during this stage.

The next step is closely linked to the oxidation step where activated carbon is utilised to adsorb the partially oxidised compounds. If GAC is used, it is also a beneficial final physical barrier to remove residual suspended solids associated with the use of an oxidation step.

Disinfection of the water is an important aspect to address and usually a two-step disinfection regime is used. The primary disinfection occurs on site where provision is made for sufficient contact time and residual levels of disinfectant to reach the goals of achieving a specific CT value (Concentration x contact time). The secondary disinfection step ensures that enough residual is provided for in the water to safeguard the distribution system.

It is essential that a well buffered water, which is slightly prone to precipitate a protective layer of calcium carbonate, is send into the distribution system to protect against corrosion. Chlorine is far more effective at pH values less than 7 and it is good practice to perform the disinfection step first before the water is stabilised by means of an alkaline compound such as lime or caustic soda.

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Figure 25 below graphically illustrates the process issues which need to be addressed during water treatment and some available technologies.

Available Process Issue Technologies

Chlorine Oxidation of Fe / Mn & Ozone Algae Chlorine dioxide

Conglomeration of suspended material and Flocculation precipitation of organics

Sedimentation Dissolved air flotation Phase separation Sand Filtration Micro/Ultra filtration

Oxidation of organics / Ozone disinfection of pathogens Chlorine dioxide

Adsorption / removal of Granular activated carbon organics, taste and odours Powdered activated carbon

Chlorine Disinfection Ammoniation

Lime Stabilization Caustic Soda

Figure 25. Process issues to consider during Design of a Suitable Process Train for Potable Purposes Three options, with the emphasis being on the phase removal steps, have been identified as a possible process train for the Bloemhof WTP and are as described below.

Recommended Water Treatement Process Train 1: Includes the reinstatement of the existing treatment train at the 14.4 Ml/d plant and construction of a new 10 Ml/d plant using primary flocculation with high rate sedimentation, followed by a DAF process followed by a rapid gravity sand filtration process. Construct a new 900 m3 clear water well with disinfection by means of chlorine.

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The recommended process train for the Bloemhof WTP is indicated in Figure 26 below.

Figure 26. Process Train Options

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The appropriateness of the location

Space at the existing Bloemhof WTW is limited. However the proposed upgrade can be accommodated on the existing site and since the land is owned by the Municipality, it is reasonable that the upgraded and extended works should be located within the boundaries of the existing works.

5.3.3 Abstraction Works Bloemhof

Two alternative abstraction points were investigated and these are as follows;

 Option 1: Connecting to the 450mm Bloemhof Dam wall outlet and installing a gravity pipeline from the dam wall to the Bloemhof water treatment works

 Option 2: Upgrading of the existing pump station immediately upstream of weir C9H021

Option 1: Connection to existing 450mm Ø raw water outlet at Dam wall

This option investigates the possibility of connection to the Bloemhof dam wall existing infrastructure. The Bloemhof Dam wall has 20 radial sluice gates each with a capacity of 500 m3/s, there is currently one 450mm Ø outlet pipe to which a 100mm Ø raw water supply pipe is connected which supplies raw water to the DWA homes and offices at the dam wall as well as raw water to a nursery situated near the wall. The 100mm Ø discharges raw water into a small raw water dam, where it is purified for domestic use.

The DWA Chief Engineer Central Operations Free State Ops has stated that the option to connect to the 450mm Ø is not possible. No other connections to the existing infrastructure are available. Thus, this option was not further investigated.

Option 2 Upgrading of the Existing Abstraction Works

The existing abstraction works is situated immediately upstream of weir no C9H021 across the Vaal River downstream of the Bloemhof dam wall. The abstraction works were commissioned in 1991. It was designed to abstract 600m3/h from the Vaal River and to pump the raw water via a 400mm Ø rising main to the water treatment works (WTW) some 450m to the north of the abstraction works.

Problems identified with the operations of the abstraction works and related infrastructure include:

 The existing abstraction works is situated below the 1:50 year flood line thus prone to flooding, and the dry pumps and the switch control room has been damaged as a result.

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 The existing abstraction works also reportedly experience abstraction difficulties during drought periods of low water levels.

 The existing sewer pump station is situated approximately 300m upstream of the abstraction works and is within the 1:50 year flood line and also prone to flooding. Problems have occurred at the pump station, which resulted in effluent being discharged into the Vaal River upstream of the abstraction works.

General Design Criteria and Assumptions

The following general criteria are applied to the design for the upgrading of the abstraction works:

 The site of the existing works is the most suitable along the river and within the Bloemhof area. The site is immediately upstream of the Arlington Port Weir No. C9H021 across the Vaal River

 The abstraction works are designed for 95% reliability or system availability in any one year

 The current abstraction works are within the 1: 50 year flood line resulting in periodic flooding

 The existing low-lift pump station will be extended and provided with additional pumping bays to cater for the additional demand requirements

 Delivery pipeline (rising main) will have a capacity of 120% of the average annual water requirement plus all downstream losses supplied to the WTW

 Sufficient additional water will be made available by DWA to supply the full bulk water requirement for the Bloemhof and Mamusa areas

Design Floods

The Bloemhof dam controls the flood experienced downstream of the dam wall. The dam wall has 20 radial sluice gates each with a capacity of 500 m3/s. The design flood data at the Arlington Port weir is given in the table below. The data was obtained from DWA hydrological series data. The data shows that average is 39.02 m3/s and that the average water level is 1210.364 masl.

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Table 38. Arlington Port Weir C9H021 Data

Design Data Value

2 Gross Catchment Area 108 652 km Regional Maximum Flood 16 000 m3/s

1:5 Return Flood 1 700 m3/s

3 1:20 Return Flood 3 600 m /s 1:50 Return Flood 4 630 m3/s

Bloemhof Dam Maximum Discharge 10 000 m3/s River bed level 1209.27 masl. Lowest OC Level 1210.36 masl.

NOC Level 1211.57 masl. OC Length 92.53 m Total Length of Structure 131.27 m

Existing Intake level 1210.04 masl.

Proposed Infrastructure

The proposed infrastructure will comprise of the following components:

 Raw water intake on the right bank of the Vaal River immediately upstream of the Arlington Port weir C9H021

 Raw water pump station, which will pump raw water abstracted from the river to the Bloemhof water treatment works over a distance of 440m

 Rising pipeline to the Bloemhof water treatment works inlets. The pipeline will be a 630mm ND, X42 steel pipeline.

5.4 APPROPRIATE WATER RESOURCE CHOICE AND WATER ALLOCATION With reference to Section 5.2.1 a groundwater study was conducted to investigate to what extent groundwater resources could be used to supplement bulk water supply to the Mamusa Municipal area. The area includes the towns of Schweizer-Reneke, Amalia, Migdol and Glaudina.

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The total number of existing municipal boreholes amount to 41 with a maximum potential yield of approximate 90 ℓ/s for 24 hours per day. The sustainable yield capacity and water quality of these boreholes is uncertain and a large number of municipal boreholes are not in use.

A feasibility study110 was carried out to upgrade bulk water supplies to the Mamusa, to meet the 2030 water requirements of about 16 Mℓ/day. A number of options were considered using surface water from various sources. The preferred option entails abstracting additional surface water from the Bloemhof dam located approximately 58.5km to the south of Schweizer-Reneke. Preliminary cost estimates to implement this option are in excess of R350 million. In view of this significant cost, it is essential that the sustainable water supply potential of local groundwater resources is investigated to either supplement surface water or provide the bulk of the town water.

The groundwater study concluded that the local groundwater resource potential for the towns of Amalia, Migdol and Glaudina is suitable to develop additional sources to meet shortfalls in 2030 and for water quality blending purposes of current supplies. The water in the area generally contains high (>10 mg/l) nitrate concentrations, requiring blending of water prior to human consumption. Potable water is anticipated for areas located in proximity of surface drainages and well separated (>1.0 km) from any on-site sanitation or crop-fertilizing activity.

In the Schweizer-Reneke and Ipelegeng town areas, the local (< 4 km) groundwater resource potential is suitable to augment supplies with an additional 1.1 Ml/day. The target areas (S2 to S4) to exploit this potential are all located on private land.

Additional surface water of 8 Ml/day needs to be imported to the area to meet the projected 2030 supply shortfall.

The Reconciliation Strategy for Bloemhof Town in Lekwa-Teemane Local Municipality in the Lower Vaal WMA (2010) report (refer to Annexure H) indicates that Bloemhof is not facing a water resource deficit and the that their primary water source, the Bloemhof Dam, is sufficient to sustain the current and projected future water requirements till 2030.

The water use registration information received from DWA Head Office (WARMS data base) indicates that the registered volume for Bloemhof (registration number 10080084) is 1 600 000 mᵌ/a.

110 Feasibility study for the upgrading of the bulk water supply to the Greater Mamusa area - Technical Report, Version no. 2. March 2008

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It is evident that Bloemhof‟s current water use already exceeds the town‟s registered water use entitlement. Application on behalf of the WSA for an increased water use entitlement in line with the current and projected future water requirements of Bloemhof including the augmentation of demand for Schweizer-Reneke has been submitted to DWA for approval.

5.5 COMPLIANCE TO WATER DEMAND/ CONSERVATION OBJECTIVES The WSDP 2011 of the DRSMDM indicates that a Strategy for the Municipality is in place, but that there is no funding available to implement it.

In both towns the water use per capita is excessive in comparison to benchmark levels, indicating that significant savings could be achieved through WC/WDM initiatives111 112.

A Project Business Plan was submitted October 2011 to DWA‟s Accelerated Community Infrastructure Program (ACIP) applying for funding to conduct and implement WC/WDM strategies for the towns of Schweizer-Reneke and Bloemhof. The approval of these funds is outstanding.

The proposed WC/WDM Strategy will concern the calculation of water losses and water loss performance indicators for the towns of Bloemhof, Schweizer-Reneke, Amalia, Glaudina and Migdol and identify the causes of water losses in these towns. Based on the outcome of the assessment a WC/WDM strategy will be prepared for Mamusa and Lekwa-Teemane LMs that will be aimed at addressing identified shortcomings.

The strategy allows for the installation of meters on the outlets of the reservoirs at Schweizer-Reneke, Amalia, Glaudina and Migdol. The advantage of this is that the municipality will be able monitor water monthly and at desired intervals.

The items were divided into tasks, namely:

 Task 1: Collect And Collate Information

 Task 2: Desktop Study

 Task 3: Field Investigations

 Task 4: Installation of Bulk Meters

111 Reconciliation Strategy for Schweizer-Reneke Town in Mamusa Local Municipality in the Lower Vaal WMA 112 Reconciliation Strategy for Bloemhof Town in Mamusa Local Municipality in the Lower Vaal WMA

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 Task 5: Logging Of Pressures And Flows

 Task6: Analysis of logging data, billing information and system input volume data

 Task7: WC/WDM Strategy

The cost to conduct and implement the proposed strategy amounts to R 1 430 700.00 (VAT included) as indicated in the table below.

Table 39. WC/WDM Cost breakdown

5.6 OPTIMAL CHOICE OF BULK INFRASTRUCTURE Refer to Section 5.3.1, 5.3.2 and 5.3.3.

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5.7 PROOF OF BEST SUITED TECHNOLOGY Refer to Section 5.3.1, 5.3.2 and 5.3.3.

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6 INSTITUTIONAL CRITERIA

6.1 OWNERSHIP MODEL The infrastructure will belong to Dr Ruth S Mompati District Municipality (DRSMDM). The pump station and water treatment works fall within the Lekwa-Teemane Municipality area. Lekwa–Teemane is a Category B Municipality and the Water Services Provider. DRSMDM is supporting the Mamusa Municipality. The Mamusa Municipality is the Water Services Provider and has an agreement with DRSMDM to assist with the water services provider function. During discussions with both Mamusa and Lekwa-Teemane Municipalities and the DRSMDM, it was indicated that the infrastructure will be owned by the DRSMDM.

6.2 CONFIDENCE IN THE CAPACITY OF THE INSTITUTION TO IMPLEMENT An assessment of the capacity of various institutions was conducted to determine their capacity to implement the project. The institutions are:

 Mamusa and Lekwa-Teemane Local Municipalities

 DRSMDM

 Sedibeng Water

 DWA Construction Unit

The outcome of the investigation as indicated in Annexure K – Institutional Assessment Report, shows that neither of the Local Municipalities have the capacity to implement the project, mainly due to lack of technical experience. At the time of the compilation of the report, it was indicated by all role players that the DRSMDM will be the Implementing Agent for the project.

6.3 AGREEMENT ON INFRASTRUCTURE OWNERSHIP PER SCHEME COMPONENT All infrastructure will be owned by DRSMDM.

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6.4 AGREEMENT ON IMPLEMENTING RESPONSIBILITY (PER SCHEME COMPONENT) In separate meetings with representatives from the respective Municipalities, a decision was taken that the DRSMDM will be the Implementing Agent on the project. A support contract is in place between the DRSMDM and the Lekwa-Teemane and Mamusa Municipalities to assist with the delivery of water services.

6.5 PROOF OF IMPLEMENTATION CAPACITY (CAPITAL EXPENDITURE OVER LAST 3 YEARS) 6.5.1 Mamusa Municipality Capital Expenditure

The income and expenditure of the Mamusa Municipality shows that the budget is balanced with no surplus or deficits being recorded. 113

The budget shows an anticipated growth in the capital budget from 2011/2012 onwards.

Table 40. MTEF budget in R’000

MTEF Budget 2009/2010 2010/2011 2011/2012 2012/2013

Operating budget R 69,164 R 78,165 R 85,140 R 96,439 Capital budget R 38,295 R 35,901 R 39,218 R 43,653 TOTAL BUDGET R 107,459 R 114,066 R 124,358 R 140,092 Growth pa in capital budget -6.3% 9.2% 11.3% Grants and subsidies R 58,894 R 61,776 R 68,890 R 76,374

% 55% 54% 55% 55%

113 Mamusa Local Municipality. Draft operating and capital budget for the MTEF 2010/2011 to 2012/2013. Mayoral Presentation, 25 June 2010. P.03, 06.

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Figure 27. Operating and Capital MTEF Budget 2009/2010 to 2012/2013

Source: Mamusa Local Municipality.114

Financial data for the year 2010/2011 indicates that the Municipality had a net surplus for the year of more than R36 million.

6.5.2 Dr Ruth Segomotsi Mompati District Municipality

The revenue of the DRSMDM shows that the budget is highly dependent on government grants and subsidies. Almost 100% of the budget is reliant on this source of revenue.

Table 41. Total revenue and contribution to this revenue from government grants and subsidies115

114 Mamusa Local Municipality. Draft operating and capital budget for the MTEF 2010/2011 to 2012/2013. Mayoral Presentation, 25 June 2010.

115 Dr Ruth Segomotsi Mompati, 2010/2011 top layer service delivery budget and implementation plan. (Implementation of the Integrated Development Plan) 2010/2011, T. 50.

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The budget shows an anticipated growth in the capital budget, with a slight reduction in 2011/2012 from the previous year. In the 2010/2011 financial year, government grants and subsidies amounted to R291 million of total income (R350 million) or 83% of total revenue, which is expected to increase to 100% in the next two years.

Table 42. MTEF budget in R’000

MTEF Budget in R'000 2009/2010 2010/2011 2011/2012 2012/2013 Operating budget R 171,859 R 188,861 R 202,359 R 193,314 Capital budget R 112,002 R 161,624 R 150,851 R 195,563 TOTAL BUDGET R 283,861 R 350,485 R 353,210 R 388,877 Growth pa in operational budget 9.9% 7.1% -4.5% Growth pa in capital budget 44.3% -6.7% 29.6% Grants and subsidies R 281,014 R 290,764 R 351,596 R 387,848 % Contribution from grants and 99% 83% 100% 100% subsidies

Figure 28. Operating and capital MTEF Budget 2009/2010 to 2012/2013

Source: Dr Ruth Segomotsi Mompati District Municipality 116

116 Dr Ruth S Mompati District Municipality, 2010/2011 top layer service delivery budget and implementation plan. (Implementation of the Integrated Development Plan) 2010/2011. T. 50.

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Source: Dr Ruth Segomotsi Mompati District Municipality 117

6.5.3 Sedibeng Water North West Region

The income and expenditure of the North West region of Sedibeng Water shows that the budget had a deficit for 2009/2010 and 2010/2011, but a projected surplus for 2011/2012 and 2012/2013.

The budget shows an anticipated growth in the capital budget from 2010/2011 onwards. The capital budget for 2009/2010 was extremely small.

Table 43. MTEF budget in R’000

2010/2011 North West Region Budget 2009/2010 2010/2011 Latest 2011/2012 2012/2013 forecast

Operating budget R 73,076 R 75,175 R 73,972 R 74,153 R 80,924

Capital budget R 106 R 2,456 R 2,450 R 1,520 R 3,590

TOTAL BUDGET R 73,182 R 77,631 R 76,422 R 75,673 R 84,514

Growth pa in capital budget 2316.98% -0.24% -37.96% 136.18%

The shortfall in the budget is mainly due to one outstanding debtor.

The capital budget was based on assumptions made from Sedibeng Water‟s business plan of the North West Region and the state of cash flow.

117 Dr Ruth S Mompati District Municipality, 2010/2011 top layer service delivery budget and implementation plan. (Implementation of the Integrated Development Plan) 2010/2011. T. 50.

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Table 44. Operating and capital MTEF Budget 2009/2010 to 2012/2013

Financial data for the year 2010/2011 indicates that Sedibeng Water had a net operating loss for the year of more than R10 million. The loss was mainly caused by outstanding accounts.

Table 45. Income and expenditure 2010/2011118

2010/2011

Revenue R 63,160,000

Expenditure R 73,972,000

Net loss for year (R 10,812,000)

Water expenditure and income

Budgeted expenditure on water shows a steep decline from 21.38% of the total expenditure to 8.54% over the four-year period from 2009/10 to 2012/13.

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Figure 29. Percentage expenditure of operating budget on water 2009/2010 to 2012/2013 Table 46. Water expenditure and income in R’000 2010/2011 Operating expenditure 2009/2010 2010/2011 Latest 2011/2012 2012/2013 Forecast Water 26,717 22,612 21,978 16,339 17,628.00 Growth in water expenditure pa -15.36% -17.74% -27.74% 7.89% TOTAL OPERATING BUDGET 73,076 75,175 73,972 74,152 80,924 „000 % Expenditure on water 36.56% 30.08% 29.71% 22.03% 21.78% Capital expenditure on water‟000 10,681 5,726 8,171 8,825 9,531 % Capital expenditure on water 14.62% 7.62% 11.05% 11.90% 11.78%

Water purification and maintenance is a major item of water expenditure, accounting for between 40% and 60% of the water expenditure. The latest 2010/2011 forecast gives the cost at 41.8% and the forecast is that it would increase to about 60% in the following years mainly due to the decrease in cost of bulk water purchases while purification and maintenance remains constant. This means that maintenance and purification have a heavier weight in the overall water expenditure. Budgeted spending on repairs and maintenance varies from 11% to 15%. The 2010/2011 budget had only 7.62% allocated to maintenance but the latest forecast shows an increase to 11.05% which is more appropriate. Expenditure of less than 10% on repairs and maintenance is usually too low, but as visible in the table above the projection is all above 10% and sufficient. By contrast, budgeted

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expenditure on salaries, which should be below the norm of 35%, varies from 38% to 49% which is too high.

Table 47. Operating Expenditure by type in R’000

Operating expenditure by 2009/2010 2010/2011 2010/2011 2011/2012 2012/2013 type ‘000 Latest Forecast Employee related costs 28,033 32,576 32,576 36,324 39,327 Maintenance 10,681 5,726 8,171 8,825 9,531 Bulk water purchase 15,624 15,870 12,791 6,396 6,907 Other 18,738 21,003 20,434 22,608 25,159 TOTAL 73,076 75,175 73,972 74,153 80,924 Employee related costs 38% 43% 44% 49% 49% Maintenance 15% 8% 11% 12% 12% Bulk water purchase 21% 21% 17% 9% 9% Other 26% 28% 28% 30% 31% TOTAL 100% 100% 100% 100% 100%

6.5.4 Lekwa–Teemane Municipality Capital Expenditure

The financial statement shows that the Lekwa-Teemane Municipality is in a deficit position in both its budget and the actual for 2009/10 resulting in an actual deficit of over R21 million. Government grants and subsidies contributed to 27% of total revenue in 2009/2010. 119

Table 48. Lekwa-Teemane 2009/2010 budget and actual performance

2009/2010 Actual Budget

Total Revenue R 113,576,265 R 93,444,265

Expenditure R 134,729,272 R 128,196,396

Net surplus for year -R 21,153,007 -R 34,752,131

Government grants and subsidies R 30,612,873 R 21,619,303

% revenue from grants and subsidies 27% 23%

Source: Lekwa-Teemane120

119 Lekwa-Teemane Local Municipality, Annual Report 2009/2010., [Online] Available from http://www.lekwateemane.co.za/joomla/index.php?option=com_content&view=article&id=77:reports&catid=59:rep orts&Itemid=80 (Accessed: 17 January 2012).

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Figure 30. Lekwa-Teemane Actual and Budgeted income and expenditure 2009/2010

Source: Lekwa-Teemane Municipality 121

The overall budget of the Municipality increased by 1.3% in 2011/2012 compared to the previous financial year. The equitable share increased with an average amount below inflation, as has the municipal infrastructure grant. 122

Detailed expenditure

Employee related costs are maintained below the norm of 35% of total expenditure. Repairs and maintenance has declined from 6% to 3% of overall expenditure in 2009 and 2010 financial years respectively, which is below the norm of 10%.

120 Lekwa-Teemane Local Municipality, Annual Report 2009/2010, [Online] Available from: http://www.lekwateemane.co.za/joomla/index.php?option=com_content&view=article&id=77:reports&catid=59:rep orts&Itemid=80 (Accessed: 17 January 2012). 121 Lekwa-Teemane Local Municipality, Annual Report 2009/2010., [Online] Available from: : http://www.lekwateemane.co.za/joomla/index.php?option=com_content&view=article&id=77:reports&catid=59:rep orts&Itemid=80 (Accessed: 17 January 2012). 122 Lekwa-Teemane Local Municipality, Approved medium term budget 2011/2012 to 2013/2014. [Online] Available from: http://www.lekwateemane.co.za/joomla/images/stories/Lekwa_docs/LekwaTeemane_Documents/reports/Budget _2011-2012.pdf (Accessed: 17 January 2012). p.3.

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Table 49. Lekwa-Teemane: Operating expenditure by type

Operating expenditure 2009/2010 2008/2009 2009/2010 % 2008/2009 % by type

Employee related costs R 28,834,258 R 29,844,172 21% 23%

Remuneration of R 2,116,695 R 0 2% 0% councillors

Repairs and maintenance R 4,072,203 R 7,344,709 3% 6%

Bulk purchases R 28,871,830 R 21,714,881 21% 17%

Contracted services R 4,126,702 R 3,329,631 3% 3%

Other R 66,707,584 R 65,963,003 50% 51%

TOTAL R 134,729,272 R 128,196,396 100% 100%

Source: Lekwa Teemane Municipality. 123

Bulk purchases comprise of electricity and water, where electricity is 74% of purchases and water 26%.

Conclusion

Studying the capital expenditure patterns of the two municipalities indicates that both Mamusa and Lekwa–Teemane do not have experience in implementing such huge projects. DRSMDM, although totally dependent on grants, is implementing huge projects. Sedibeng Water‟s budget for the past years also shows that the North West Region does not have the experience in implementing similarly large bulk water projects.

DRSMDM, at the time of compiling the report, had the capacity to implement projects such as the bulk water pipeline project.

123 Lekwa-Teemane Local Municipality, Annual Report 2009/2010. Financial Statement, p. 9. [Online] Available from: http://www.lekwateemane.co.za/joomla/index.php?option=com_content&view=article&id=77:reports&catid=59:rep orts&Itemid=80 (Accessed: 17 January 2012).

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6.6 HISTORY ON PAST IMPLEMENTATION QUALITY & PERFORMANCE A media release on 22 January 2007 (2006/7 financial year) stated that municipalities that are struggling to spend their Municipal Infrastructure Grants in North West Province which included Moretele, Rustenburg, Kagisano, Mamusa, Bophirima, Ramotshere Moiloa, Tswaing, Naledi, Lekwa- Teemane and Merafong, all of which had spent less than 50% of their grants.124

According to a presentation Lekwa-Teemane Local Municipality had spent 0% of their MIG allocation in 2007/2008, although according to its Annual Report for 2009/10, it improved to 100%. Mamusa Municipality spent 99.7% and according to the report entitled “Consolidated statement on the performance of municipality” the capital expenditure on projects on 31 December 2011 was indicated:

 Mamusa – 0%

 Lekwa–Teemane - 11%

 Dr Ruth Mompati District – 0.5%

Based on the above, none of the Municipalities performed well in terms of the implementation of the projects. Overall funding for the district is unsatisfactorily low, being especially reliant on grants and subsidies for income125.

6.7 AGREEMENT ON OPERATING RESPONSIBILITIES PER SCHEME An assessment was conducted of the operating capacity of the municipalities. (See Institutional Assessment Report attached as Annexure K) The information on the staff available, skills and necessary operating procedures, policies and bylaws indicates that neither Mamusa Municipality, Lekwa–Teemane Municipality or DRSMDM have the necessary staff to operate the scheme. An agreement is already in place between the Lekwa–Teemane Municipality and Sedibeng Water for the operation and maintenance of the waste water treatment works in Christiana. DRSMDM is on the

124 http://www.nwpg.gov.za/ddlg&h/Media/MIG.htm (Accessed 20 July 2012)

125 Consolidate statement on the performance of municipalities, https://docs.google.com/viewer?a=v&q=cache:YRAzQHTm9fsJ:treasury.nwpg.gov.za/documents/policies/Strateg ic%2520Documents/2nd%2520QUARTER%2520%25202011- 12%2520%2520Fina%2520final%2520DRAFT.DOCX , site visited on 20 July 2012

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other hand assisting Mamusa through a Support Services Contract with the maintenance of Schweizer-Reneke‟s waste water treatment works.

It is proposed that the operation and maintenance be conducted by the Lekwa-Teemane Municipality for the abstraction works and water treatment works initially. Once the total scheme is completed, negotiations with both the Municipalities and Sedibeng Water can commence regarding the overall O&M.

6.8 PROOF OF ADEQUATE STAFF NUMBERS AND SKILLS LEVELS PER SCHEME COMPONENT As indicated in the Institutional Assessment Report, none of the Municipalities have the necessary qualified staff to manage the pump station, water treatment works and the pipeline. It was therefore recommended that Sedibeng Water, who has qualified staff, be appointed to manage the infrastructure on behalf of the two Municipalities.

6.9 HISTORY ON WATER SERVICES INTERRUPTIONS According to the 2007 WSDP of the DRSMDM, no records are kept by any of the Municipalities on water services interruptions.126 It appears as if the situation has not changed. The 2011 WSDP of Dr R Segomotsi Mompati District Municipality captured the information of all the Water Services Authorities and Providers under its area of jurisdiction. It appears as if no records are yet being kept of complaints received. It was however indicated that in 90% of the cases, the complaints are dealt with in 24 hours.

At the time of the compilation of the Institutional Assessment Report, water restrictions were issued in Mamusa Municipality and especially, in Schweizer-Reneke. Some areas, such as Ipelegeng Extension 5 and 6, as well as New Town, were experiencing water shortages. The Ipelegeng Extension 7 and 8 cannot be built due to water shortages. These areas are earmarked for RDP housing.

126 Dr Ruth S Mompati, Water Services Development plan, 2007, p92

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6.10 COMMITMENT FOR ABOVE BY INSTITUTIONAL LEADERSHIP Senior management and Council of DRSMDM still need to take a formal decision on the recommendation of the Institutional Framework.

6.11 COOPERATION AGREEMENT BETWEEN KEY STAKEHOLDERS The Project Steering Committee is seen as the platform to discuss all the components of the project. Al the key stakeholders, such as the Municipality and private institutions, are represented on this Committee.

6.12 APPROVAL OF INSTITUTIONAL ARRANGEMENT The Institutional Report has been circulated to all role players for comments and no comments have been received. The recommended Institutional Framework must still be officially approved by senior management and the council of DRSMDM.

6.13 COST RECOVERY Although water users are billed, cost recovery in both Mamusa Municipality area and Lekwa-Teemane Municipality is inadequate. The payment culture in Schweizer-Reneke is relatively high due to the fact that the Credit Control Policy is implemented there. Water restrictions were also applied. The development of a cost recovery strategy has been part of the Lekwa-Teemane Municipality‟s IDP for the past 2 years. A serious effort will have to be made to improve the cost recovery within both the Municipalities.

Please refer to the Section 3: Social Criteria for a discussion on the proposed water tariffs and affordability of the said tariffs.

6.14 WATER CONSERVATION AND DEMAND MANAGEMENT None of the Municipalities have a Water Conservation and Demand Management Strategy in place. As indicated in the table below, water meters are in place and read, but water balance and water losses cannot be determined. The 2011 WSDP 2011 of the DRSMDM indicates that a strategy for the Municipality is in place, but that there is no funding available to implement the strategy.

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Table 50. Status of Water Conservation in Mamusa and Lekwa–Teemane Municipalities

Mamusa Non- Municipality compliant Water meter readings are performed in the municipal area. However, not all households in Ipelegeng have water meters. The non-revenue water cannot be determined and a water balance cannot be conducted. Consumer meters are supposed to be tested on a regular basis (e.g. once a year). This is however not conducted and therefore the accuracy of the meters is unknown. A Meter Testing and Calibration Programme with suitable equipment must be conducted. 127

Mr Masobe indicated during an interview held on 27th October 2011 that no zoning meters are in place and therefore no water balance can be conducted.

Currently, Mamusa Municipality has contracted out the function of meter readings and it is performed and submitted electronically for the more developed areas and manually for the less developed areas to the finance office.128

Lekwa–Teemane Non- Although water meters are read, no water losses are determined. No Municipality Compliant water losses can be determined.

6.15 RESPONSIBILITIES AND ACCOUNTABILITY The DRSMDM will be responsible for the planning of the project and will act as Implementing Agent for the project, but will advertise the position of a Project Management of the project. This will however be done in co-operation with the relevant Municipalities. The DRSMDM‟s procurement policy is be applicable and it takes responsibility for the financial management and accountability of the project funds.

An agreement between DRSMDM, Lekwa–Teemane Municipality and Mamusa Municipality will be signed with Sedibeng Water for the operation and maintenance of the infrastructure.

127 Evaluation of the Water Services Providers within the Dr. R.S Mompati District Municipality, dated 31 October 2011, compiled by UWP consultants, Annexure B Water Services Provider Assessment tables. 128 Evaluation of the Water Services Providers within the Dr. R.S Mompati District Municipality, dated 31 October 2011, compiled by UWP consultants, p 24

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7 FINANCIAL CRITERIA

7.1 AVAILABLE FUNDING It is envisaged that the entire project will be funded through grants. DWA Regional Infrastructure Grant (RBIG) indicated that it 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 DRSMDM has to apply for exemption on the issue of counter funding.

7.1.1 DWA Regional Bulk Infrastructure Grant

DWA indicated that a tentative budget allocation or R16.56 million was made for the Mamusa bulk water project for the year 2013/2014 and that the remainder of the funds would be due in the following two or three financial years. This budget allocation was however subject to the project being implementation ready in accordance with the DWA Regional Bulk Infrastructure Grant Policy Guidelines.

The portion of the pipeline that delivers water to the social component is 56.5% while the portion of the water treatment abstraction works is 44.8%. The weighted average for the project is 50.5%, thus R 216 867 573 (including VAT) is to be funded from RBIG, while the remaining R 212 573 166.09 (including VAT) million has to be counter funded.

7.1.2 Counter Funding

A motivation was drafted in conjunction with CoGTA to National Treasury requesting exemption on the issue of counter funding.

7.2 FUNDING CONDITIONS Only the social component for the grant can be funded in terms of the Regional Bulk Infrastructure Grant Policy Guidelines. Since the total capital portion of the project will be funded through grants, no funding conditions are applicable other than those of National Treasury.

7.3 FINANCIAL ANALYSIS OF COST AND INCOME PROJECTIONS The financial analysis conducted in the Comprehensive Financial Plan considered the viability of the project and the affordability of raising a loan for the non-grant funding portion needed. Several cash

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flow models were considered at deriving at a suitable answer. Since the entire project will be funded through grants, the cash flow projections will be revised.

7.3.1 FINANCIAL STATUS, PERFORMANCE & CREDITWORTHINESS

The implementing agent will be the DRSMDM, which will be supported by specialists of WorleyParsons RSA (Pty) Ltd, Lidwala Consulting Engineers and civil, mechanical and electrical contractors. The possibility of utilizing the DWA Construction (DWA-CUW) unit was discussed and a decision is yet to be made in this regard. The following benefits regarding the utilization of it will be presented to Council so that a decision can be made:

 DWA-CUW will maximise the employment of local labour without impacting negatively on the output / the quality of work, thereby ensuring as many possible local job opportunities

 Imported staff to be employed on the contract will be limited to skilled persons and only if those skills cannot be sourced from the local community

 Sub-contracting work will be advertised through the local press and tenders will be evaluated on the scoring system used by DWA

 The tender process will be cut out

 DWA-CUW is an effective and efficient unit

 It is the objective of the construction unit to prove their worth and commitment to socio economic aspects for future projects

 The DWA-CUW will be available to perform emergency work in the region related to water and sanitation (ACIP)

 The contract price of the DWA-CUW should be less than that of commercial contractors since the DWA-CUW, being a government institution (division of DWA), is not intended to make profit

 Most of the pipe fittings and related works will be manufactured at the DWA workshop/service centre located in Jan Kempdorp, thus not reliant on commercial suppliers

Should the general procurement processes of the DRSMDM be followed in appointing contractors, the contractors‟ credit ratings will be evaluated before agreements are concluded.

WorleyParsons RSA and Lidwala Consulting Engineers have a credit rating of “B” (good for the amount mentioned).

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The annual financial statements (AFS) of the Mamusa and Lekwa-Teemane LMs have been studied and interpreted for this purpose as follows: AFS for the year ended 30 June 2011 for Lekwa-Teemane LM and the AFS for the year ended 30 June 2008 for Mamusa. The latter municipality statements are outdated.

Both Municipalities are experiencing serious financial constraints. Both balance sheets indicate serious cash flow shortages. Both the results from the income statements reflected large losses.

The collection of revenue and the large percentages written off to bad debt are of great concern. Other than the generally poor financial status of the municipalities, the most direct aspect affecting the project would be the accruing and collection of revenue for water and sanitation services.

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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. The various types of licensed and unlicensed entitlements to use water are dealt with in detail.

Chapter 4 of the National Water Act sets out general principles for regulating water use. Water use is defined broadly, and includes taking and storing water, activities which reduce stream flow, waste discharges and disposals, controlled activities (activities which impact detrimentally on a water resource), altering a watercourse, removing water found underground for certain purposes, and recreation. In general a water use must be licensed unless it is listed in Schedule 1, is an existing lawful use, is permissible under a general authorisation, or if a responsible authority waives the need for a licence. The Minister may limit the amount of water which a responsible authority may allocate. In making regulations the Minister may differentiate between different water resources, classes of water resources and geographical areas.

Eleven different water uses are listed in Section 21 (a) to (k) of the National Water Act of 1998. Of these the following are related to this project:

 Section 21(a) – Taking water from a water resource

 Commonly this use involves pumping of water from a dam or river, or from a borehole  Nationally the greatest volume of water is taken for the purpose of irrigated agriculture  Section 21(c) - Impeding or diverting the flow of water in a watercourse

 Impeding or diverting flow does not cause any loss in flow  Impeding or diverting structures can fully or partially extend into a river, forcing the natural flow direction to be re-directed around the structure  Impeding or diverting can be temporary, during construction of a road bridge for example. It can also be permanent, such as the building of a low water bridge across a river where the flow is permanently impeded as it moves under the bridge  Section 21(i) - Altering the bed, banks, course or characteristics of a water course

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 This water use refers to the physical changes that are made to a water course, for example to widen or straighten the channel of a river  Alteration of the bed and banks is usually needed for construction and infrastructure development near or across a river  Alteration of the course of a watercourse refers to the diversion of the water course. The river channel is usually reconstructed or replaced with a canal which may extend for several kilometres from the original course. 8.1.1 Abstraction WULA

The current abstraction works water use is registered by the Lekwa-Teemane Local Municipality who is the Water Services Provider for the area with the registration number 10080084. The table below summarises the existing water use licenses.

Table 51. Current Water Use Licence Authorisation data

Water Services Provider Lekwa-Teemane Local Municipality- Registration No. 10080084 Bloemhof

DWA Office Lower Vaal Northern Cape Status Date 2002/05/28 Status: Registered

Water Resource Information Type of water source Scheme Vaal River (Scheme)- Middle Vaal Name or Reference No. of MV 2/5 Bloemhof to Weir Abstraction Point:

Scheme Management parameter Bloemhof Municipality SMP Servitude Volume 415401(m3)/an Information num

Geographic Location Datum Type: Latitude: 27o 7’ 19.9” S 27.1222 o S 27 o 7.332’ S of abstraction point Cape (Modified Clarke 1880)

Longitude: 25o 10’ 44.8” E 25.179103 o E 25 o 10.74618’ E

Sector: Industry(Urban) AR Division: Raw Water Billing Frequency Monthly

RFP Subsidy No Quaternary C91A Water Management Area: Lower Vaal Region

Existing Authorisation: Existing Permit No. 3/16/2/91 Permit Date 1991/01/30 Registered Volume(s): Start Date 1978/01/01 Volume (m3) 1 600 000 Time Interval Per year

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8.1.2 Wetland WULA

A wetland specialist wetland delineation study was conducted for the affected pipeline route. This report was finalized and submitted February 2012. This specialist study was taken at the required level for water use license applications.

The WULA was initiated after completing the wetland specialist study in February 2012. An Integrated Water Use License process was undertaken for the activities of Section 21 c and i, however an additional process for the activity of Section 21 a (taking water from a water resource) are underway. The status of the Water Use Licence Application is as follows;

 A brief WULA application report has been drafted

 The report includes project background

 Existing WULA registration

 Application forms

 Technical and supporting documentation

 Details of the applicant

 Details of the property

All standard and applicable WULA registration forms have been completed and forwarded to the relevant parties for signature and formally submitted to DWA Kimberley office – Refer to Annexure S.

The WULA process may take up to a year to complete depending on the Department of Water Affairs regional office and the way it determines the reserve, classifies the reserve and sets resource quality objectives for the reserve affected by the bulk pipeline project with the supplied documentation and specialist studies. Once all the requirements in terms of resource directed measures (RDM) are obtained, the DWA Regional Office will forward the WULA file to the Department of Water Affairs Head Office. Should the information be sufficient, the Department may approve and grant a Water Use License, however should information lack or be outstanding, DWA Head Office may refer the file back to the DWA Regional Office. The service providers will be informed of the outstanding

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information and additional requirements. As mentioned above it is for this reason why a water use license may take up to a year or more to obtain, staying within the municipality‟s timeframes and budget for the project may be compromised.

8.2 ENVIRONMENTAL AUTHORIZATION FOR CONSTRUCTION OF SCHEME An EIA Basic Assessment process was undertaken by MDA Environmental Consultants for the proposed construction of a pipeline from the Bloemhof Dam to Schweizer-Reneke. The EIA commenced in November 2011 with a site evaluation and public participation on 3 November 2011.

Specialist input with regard to wetlands was obtained in February 2012 and the draft Basic Assessment Report was completed and sent to interested and affected parties for a 40-day comment period on 5 March 2012. MDA accompanied an official from the Department of Agriculture, Forestry and Fisheries to the site on 13 April 2012, in order to obtain feedback with regard to Camel Thorn trees affected by the proposed pipeline.

The EIA was executed by MDA Town Planners and Environmental Consultants and documented in the Draft Basic Assessment Report (dBAR) dated November 2013 (DEDECT Reference No. NWP/EIA/59/2013). The dBAR is in the process of being updated and the expected submission date of the Final BAR to the Department Economic Development, Environment, Conservation and Tourism – North West Provincial Government is January 2014. The submission is being delayed till January 2014 since the DEDECT requested that the public participation be reviewed because of the time elapsed since the first submission. The dBAR can only be submitted with the inclusion of the reviewed public participation process.

8.3 LAND AND PROPERTY RIGHTS 8.3.1 Bulk pipeline property rights

Landowners

With reference to Section 5.3.1, the Olievenfontein pump station and the Vaalpoort storage tank will be located on privately owned farm land.

Three landowners were consulted for available land for the construction of a booster pump station and elevated tank, the repeater signal station and a second elevated tank. The landowners are willing

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to enter into an agreement with the Municipality. The tile deed report prepared by TMK Professional Land Surveyors is attached as Annexure N.

The District Municipality considered several compensation methods to obtain the above mentioned portions of the properties of which a market related buy-out or compensation through a water take-off agreement were the most feasible options.

After careful consideration of the practicalities with regard to a water take-off agreement, the DRSMDM preferred compensation by means of a market related buy-out. A valuation was done in February 2012 (Van Biljon Prokureur Valuation report dated 22 February 2012 – Annexure O) which recommended R 11 400.00 (VAT included) as a market related value. The negotiation process with the landowners is well underway. As soon as an agreement is reached with the landowners, the legal documentation will be drafted and registration of the servitudes will be done according to the National Water Act (NWA) Act 36 of 1998.

Eskom

The DRSMDM is applying for the electricity connections at the following properties:

 Portion 12 of the farm VAALPOORT No. 84-HO for the proposed pumps station with a proposed transformer size of 315 KVA, three phase.

 Remainder of Portion 3 of the farm OLIEVENFONTEIN No. 114-HO for the proposed storage tank with a proposed transformer size of 16 KVA, single phase.

The quotation in this regard is outstanding and will be attend to.

Transnet

The pipeline will also cross a number of railway lines at Bloemhof. A 900 mm ND concrete sleeve pipe will be installed by means of pipe jacking underneath all the railway lines and the new pipeline will be installed inside the concrete sleeve.

Discussions with Transnet commenced during the preliminary design phase and the application to cross the railway lines was submitted to Transnet the 24 July 2013 (Annexure Q). A site meeting was

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held with Transnet representative in the area, Mr Ronald Kalimashe. A follow-up meeting was held with Transnet the 6th December 2013 where the approval is expected soon after.

Road Reserve Wayleave

The wayleave application to install the pipeline in the road reserve was obtained on 15 November 2011 from the Department of Transport, Roads and Community Safety – North West Provincial Government (Annexure R). The contact person from the Department is Mr Johan Dorfling.

Other Services

Various other existing overhead and underground services along the pipeline route will also be crossed by the new pipeline. Unfortunately no as-built information of the municipal infrastructure in Bloemhof and Schweizer-Reneke were available. During the site investigation and route determination, lamp poles, manholes and storm water kerb inlets were detected in the vicinity of the proposed pipeline route.

The contractor will be responsible to locate and expose existing underground services before commencing with excavation activities in the vicinity of the existing services. Only hand excavation will be allowed in the vicinity of the service crossings. Only non-explosive methods for hard rock excavation will be allowed where applicable.

8.3.2 Bloemhof WTW

The existing and proposed extension of the WTW will be located within the existing site boundaries and therefore no land ownership or other legal issues need to be resolved. However, the electricity supply will have to be upgraded at a cost of approximately R 798 000 (including VAT). The Lekwa- Teemane Municipality confirmed that the electricity upgrade would be undertaken as soon as the funds are available.

8.3.3 Bloemhof abstraction works

The Lekwa-Teemane Local Municipality has recently sold Portion 12 and the Remainder of the Farm Klipfontein No. 344_HO, the land on which the existing abstraction pump station is situated (refer to Annexure S). A servitude in favour of the Local Municipality has been registered to accommodate the footprint of the existing pump station. This servitude will need to be increased to cater for both the increased size of the pump station and the existing and new proposed pipeline.

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As the land is registered as a farm portion it has an agricultural zoning, however the National Water Act 36 of 1998 clause 144 and 145 clearly states that no township may be established below the 1:100 year flood line and it is the duty of the water management institution to provide information of the likely levels of floodwater that may be reached from time to time. The land in question is below the 1:50 year flood line therefore no development should be allowed to take place on the land.

Agreement will also need to be reached with the management of the Bloemhof Golf course for the installation of the flood protection berm which is to extend from east of the current sewer pump station to past the existing abstraction works.

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9 SUSTAINABILITY CRITERIA

9.1 FINANCIAL VIABILITY 9.1.1 Financial

DWA has already allocated proportional grant funding for the implementation of this project for the financial year 2013/2014 and DRSMDM is in the process requesting exemption from counter funding. A motivation is being drafted in conjunction with CoGTA to National Treasury requesting exemption.

The overall project cost is at R 429 440 739.58 (VAT and escalation included). See Preliminary Design Reports attached as Annexure D, E & F for detailed cost breakdown of Project Cost including operations and maintenance costs.

The DWA RBIG contribution is applicable to the social component. DRSMDM is proposing a social component of 50.5% to DWA. On the total scheme‟s implementation cost it implies that DWA will contribute an amount of R 216 867 573 (including VAT) and DRSMDM will need to request exemption from the counter funding to an amount of R 212 573 166.09 (including VAT).

9.1.2 Economic

Further economic growth and development within the two municipalities are dependent on the successful implementation of the project. Agriculture and mining are two keys sectors that can significantly be benefited and created numerous job opportunities. From the project itself, the new pipeline, the water treatment works and abstraction works is expected to stimulate significant economic activity within the regional economy. The Lekwa-Teemane and Mamusa Municipalities are experiencing low levels of labour force participation and employment. The scale of the project poses certainly 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.

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

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9.2 OPERATING AND MANAGEMENT CAPACITY, PERFORMANCE AND COMMITMENT The DRSMDM will be the owner of the infrastructure and it is proposed that the operation and maintenance be conducted by the Lekwa-Teemane Municipality for the abstraction works and water treatment works initially. Once the total scheme is completed, negotiations with both the Municipalities and Sedibeng Water can commence regarding the overall O&M.

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 DWA‟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 droughts

 New infrastructure to improve the water service quality

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10 CONCLUSION

The primary objective of this report is to illustrate how the proposed project meets the prescribed requirements to qualify for RBIG funding. The DRSMDM is applying for RBIG funding to fund the capital cost associated to the project.

The upgrading of the Bloemhof abstraction works and WTW and the construction of the bulk water supply pipeline to Schweizer-Reneke is seen as an essential service of the DRSMDM to supply to the two communities. As the current WTW is being operated at full capacity and the abstraction works is unable to supply raw water to the WTW during flood and drought periods, the risk of not supplying good quality water is increasing. The sustainability of the water source supplying Schweizer-Reneke is already questionable. The project is also in line with the strategic planning documentation including the Reconciliation Strategies and the IDPs of both municipalities.

 The financial status of the municipality, the WSA is not able to raise a loan from any banking institution. In in spite of the ability or opportunity of the WSA to receive income from the water services tariffs, the DRSMDM is unable to raise the capital up-front.

 The motivation to fund the economic component is normally from municipalities in rural areas. Often an alternative financially sound Water Board does not exist in such areas. Some of the Water Boards are also financially weak and do not have adequate capacity.

 Revenue generated from providing services will be possible when the project is completed and is supplying services. Large projects can take more than three years to be completed but the WSA has to provide the capital from the start of construction.

 Normally bulk infrastructure has a design horizon in excess of ten years. This implies that the full potential revenue that can be expected from the infrastructure will only be materialized at some point in the future.

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The DRSMDM will be the owner of the infrastructure of the proposed upgraded WTW, abstraction works and bulk pipeline. Several servitudes will be registered in the name of the DRSMDM for the proposed infrastructure. Permission has been obtained from the Department of Transport, Roads and Community Safety – North West Provincial Government to construct a rising main pipeline inside the road reserve of Road No. P12/1. Application was submitted to Transnet and approval is expected end of January 2014.

Two additional electricity supply points have to be obtained for the pump station and reservoir along the bulk pipeline. The upgrading of the transformer supplying the WTW in Bloemhof will have to be upgraded. The application was submitted and Eskom‟s reply is expected mid-January 2014.

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 Lekwa-Teemane and Mamusa Municipalities incorporating the client‟s operational and maintenance requirements.

Following the completion of this study it is proposed that the “Mamusa Bulk Water Supply Scheme” project is implementation ready and that it qualifies for RBIG funding in terms of DWA requirements.

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Annexure A. Mamusa Local Municipality. Final IDP reviewed document 2010-2011

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Annexure B. Lekwa- Teemane IDP draft 2011 - 2016

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Annexure C. Dr Ruth Segomotsi Mompati District Municipality Integrated Development Plan 2011-2016

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Annexure D. Bulk Water Supply Scheme – Preliminary Design Report

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Annexure E. Extension of the Bloemhof WTP Preliminary Design Report

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Annexure F. Preliminary Design report: Bloemhof abstraction

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Annexure G. Reconciliation Strategy for Schweizer-Reneke Town in Mamusa Local Municipality

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Annexure H. Reconciliation Strategy for Bloemhof Town in Mamusa Local Municipality

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Annexure I. Interested and affected parties and comments on the draft BA Report

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Annexure J. Social and economic criteria report of the Implementation

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Annexure K. Institutional Assessment Report

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Annexure L. Mamusa and Lekwa-Teemane Local Municipalities’ Free Basic Policies

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Annexure M. WSDP

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Annexure N. Title Deed Report – Pipeline

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Annexure O. Valuation Report

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Annexure P. Eskom Application

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Annexure Q. Transnet Application

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Annexure R. Department of Transport – Wayleave Approval

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