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2016 02 12 Umshwathi Combined BP.PDF UMSHWATHI BULK WATER SUPPLY SCHEME WATER PROJECT BUSINESS PLAN FEBRUARY 2016 PREPARED BY: PREPARED FOR Royal HaskoningDHV (Pty) Ltd Umgeni Water Telephone N° : 033 328 1000 Telephone N° : 033 341 1203 Fax N° : 033 328 1007 Fax N° : 033 341 1218 Email Address : [email protected] Email Address : [email protected] P O Box 1066 P O Box 3235 Pietermaritzburg, 3200 Pietermaritzburg, 3200 30 Montrose Park Boulevard 310 Burger Street Montrose Park Village Pietermaritzburg, 3201 Victoria Country Club Estate Montrose, Pietermaritzburg, 3201 Contact Person: Mr P Sibanda Attention: Mr M Scott EXECUTIVE SUMMARY Context The existing Wartburg Bulk Water Supply, east of Pietermaritzburg, is operating at maximum capacity. Instead of merely reinforcing the capacity of the existing supply Umgeni Water has identified underserviced rural communities in the hinterland of the Mshwathi, Ndwedwe and Maphumulo local municipalities, east of the existing scheme, that have source constraints and would optimally benefit from extended coverage of the existing supply into a regional scheme. This Business Plan concerns the expansion of the Wartburg Bulk Water Supply into a wide area bulk supply scheme known as the uMshwathi Regional Bulk Water Supply Scheme. The new areas of supply lie within the uMgungundlovu and iLembe WSA boundaries and include Swayimane, Greater Efaye, Ozwathini and the major part of Ndwedwe local municipality, together with augmentation of the supply to Maphumulo. The scheme will also supply economic activities in the areas of Appeldoorns and Marburg and will reinforce the existing supply to Mpolweni, Albert Falls, Trust Feed and the towns of Wartburg, Dalton, Cool Air and Schroeders. The extension will enable economic growth and provision of social services in existing centres, whilst extending the supply area into the traditional settlement areas thereby greatly improving the quality and reliability of water supply, supporting backlog eradication and enabling further social and economic development. Umgeni Water has spearheaded the development of the uMshwathi Regional Bulk Water Supply Scheme (RBWSS) in collaboration with the District Municipalities of uMgungundlovu and iLembe and their consultants. Umgeni Water has also taken the initiative with the rollout of the Scheme through the provision of funds from the Umgeni Water Capex budget. In October 2015 Umgeni Water submitted an Implementation Ready Study as an application for RBIG funding for the social components of the project to counter-fund the capital investment from Umgeni Water. The primary objective of this report is to document the need for, viability and characteristics of the proposed uMshwathi RBWSS (Umgeni Water Project No. U10616A). Beneficiaries The aggregate population of the areas that will be newly supplied from the scheme (social component) is 237 824 (2011) and this number is projected to reach 332 462 by the year 2045. This is in addition to an estimated 39 000 people in the existing coverage areas expected to increase to around 55 000 people by 2045. Water Source The water source for the scheme is the Midmar Dam from where raw water is conveyed for purification at Umgeni Water’s DV Harris Waterworks near Pietermaritzburg. This is a well-managed source with a degree of supply assurance exceeding 98%. The bulk water system will be owned and operated by Umgeni Water in terms of the Bulk Water Supply Agreements in place. Both uMgungundlovu District Municipality and iLembe District Municipality have given their support to both the project and the application for RBIG funding. W:\ADMIN\W01.DUR.000188 - Umgeni Water, Ndwedwe\Mshwathi BWSS (RBIG Business Plan)\2016_02_12_uMshwathi combined BP.doc -i- Alternatives Considered In recent years the District municipalities of uMgungundlovu and iLembe have prioritised water supply to under-services areas in Swayimane, Ozwathini, Efaye and the Ndwedwe local municipality area as well as Maphumulo. These activities included the development of local reticulation networks supplied from a number of diverse water sources, both surface- and groundwater. Network coverage has been greatly increased but the source aspect has remained a problem, both in terms of intrinsic reliability as well as logistical and operational and maintenance challenges. Comprehensive planning studies conducted between 2007 and 2014 examined various ways of supplying the Swayimane, Ozwathini, Efaye and Ndwedwe area. These included the 2007 Southern iLembe Reconnaissance Study, the 2008 Detailed Feasibility Study into Augmentation and Extension of the Wartburg Scheme (both compiled by Umgeni Water) and the Planning Study for Southern Ndwedwe, conducted between 2013 and 2015 by Royal HaskoningDHV. In addition to these studies various other business plans and technical reports for the various parts of the proposed supply area were compiled by a number of consultants, all of which were reviewed and, where relevant, the information combined in preparation of this Business Plan. A 2013 water resource assessment conducted under the Planning Study for Southern Ndwedwe effectively ruled out the viability of developing local water resources as a source option. The study highlighted the value of tapping into existing bulk water infrastructure situated on the periphery of the target area that could supply the areas without further pumping. These recommendations were accepted by the project steering team and the same principal was adopted for the supplies to Swayimane, Ozwathini and Greater Efaye. The service requirements were incorporated into the concept of the uMshwathi RBWSS, then under development, to ensure that adequate capacity would be provided for all future users. Coordination between the various parties involved has enabled the objectives and frameworks to be harmonised. The impact of the uMshwathi RBWSS on the water supply in the beneficiary areas has been modelled and this has shown that the implementation of the Scheme as proposed will eliminate the need for the majority of the existing local water sources, treatment plants and multiple pump stations. This will lead to simplified operations and maintenance, reduced recurrent costs and increased reliability of supply. The intention of the social focus of the project is to provide basic services to the beneficiary communities, supporting economic growth and developments in the area. Purpose of this Study The purpose of this Business Plan is to: Present a combined needs analysis for the proposed service areas Combine the technical features of the selected options for a sustainable water supply to the beneficiary communities. Describe the proposed levels of service and design parameters. Furnish a capital cost estimate for the proposed bulk water transfer system. Furnish a proposed implementation programme to generate a realistic cash flow for the project; Furnish O&M costing estimates. W:\ADMIN\W01.DUR.000188 - Umgeni Water, Ndwedwe\Mshwathi BWSS (RBIG Business Plan)\2016_02_12_uMshwathi combined BP.doc -ii- Funding Requirement The overall project value is R2 308 734 000 (including interest capitalised, escalation and VAT). Based on the norms, number of indigents, associated users and enabling economic environment the social component of the project was calculated at 61%1. The social component of the project amounts to R1 409 040 000 (including VAT). The project will be counter-funded by Umgeni Water Capex to the amount of R 899 694 000 (including VAT) in respect of the commercial component of the project. Umgeni Water will be the owner of the bulk infrastructure and will be the operator in terms of conditions of the existing Bulk Supply Agreements with the WSAs. The funding mix is based on the repayment of the project costs including operating costs over a 20 year repayment period. In order to ensure a repayment of the debt incurred over a 20 year period. Implementation Readiness Environmental approvals are in place for Phases 1 to 3 of the scheme and processes are underway or planned for the remainder of the project in line with the programme. Land owner consultations are being pro-actively managed and wayleaves are in place ahead of start of construction. Agreements have been obtained with Eskom on the supply of bulk electricity to each of the key pump stations making up the project. Significant savings will accrue in some supply zones due to the elimination and reduction of pumping. Recommendation Following combination of data from the constituent business plans, it is proposed that the “uMshwathi Regional Bulk Water Supply Scheme” project as herein defined constitutes a viable business case and is implementation ready and that it qualifies for RBIG funding in terms of DWS requirements. 1 Implementation Readiness Report: Mshwathi Bulk Water Supply Scheme, Umgeni Water, September 2015, Executive Summary W:\ADMIN\W01.DUR.000188 - Umgeni Water, Ndwedwe\Mshwathi BWSS (RBIG Business Plan)\2016_02_12_uMshwathi combined BP.doc -iii- TABLE OF CONTENTS Page N° EXECUTIVE SUMMARY .......................................................................................................................... i 1 INTRODUCTION ...................................................................................................................... 1 1.1 Project Title ............................................................................................................................... 1 1.2 Project Name Background .......................................................................................................
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